Lukas Freund, Columbia University's Business School

"Superstar Teams"

Abstract

Most people work in teams, a feature absent from typical macro models. I propose a tractable theory in which production requires many differentiated tasks, workers possess heterogeneous task-specific skills, and team formation involves search. Skill specificity endogenously generates coworker talent complementarities: talented workers gain more from more talented colleagues. This promotes the concentration of talent into a few firms with "superstar teams.'' Using administrative panel data for Germany, I validate this mechanism and explore the macroeconomic implications of team production. Growing skill specificity since the mid-1980s has amplified coworker complementarities, which explains increased firm-level wage inequality.  Only a fraction of the productivity gains from increased specialization materializes unless accompanied by enhanced matching of coworkers with complementary skills.  

For more information about Lukas Freund and his interesting work - link to his website.

Contact person: John Kramer