Team production and firm dynamics with search and matching models

Abstract

This thesis investigates various aspects of the effects of technological change, capital subsidies, and firm dynamics on labor reallocation, wage inequality, the gender pay gap and, coworker learning in Italy. The first chapter uses a matching model that partitions the workforce into white and blue-collar workers, and firms hire both types while optimizing their labor composition based on a quality-quantity trade-off. Technological change leads to increased capital investment, affecting labor composition and wage distribution. Results from simulation modeling on Italian data show that worker-capital complementarities drive inequality changes within firms, while worker-capital complementarities, worker-teammates complementarity, and compositional effects account for shifts in the between-firms component. The second chapter further investigates the impact of capital subsidies on the gender pay gap, highlighting the distribution of the pay gap between and within firms over time. A theoretical model explains the connection between pay gap distribution, capital intensity and skill pay gap. Reducing capital rental prices can decrease gender pay gap by allowing female workers to sort into better-matched jobs at the expense of an increased skill gap. The last chapter explores coworker learning opportunities, acknowledging firms as the ultimate arrangers of a worker’s group of colleagues. A firm dynamics general equilibrium model with human capital spillovers among colleagues is used. The model human capital allocation is efficient, as it balances learning and production complementarities based on firm productivity level. Using employer-employee data, the study reveals stylized facts on coworker spillovers conditional on firm growth and size, emphasizing the importance of a large pool of small growing firms to generate coworker learning opportunities.