arXiv subjects

Paweł Gola

Publications and source records attributed to Paweł Gola.

3 recordsLinked to original sources

arXiv2026

Sorting along Business Cycles

We develop an analytically tractable model featuring heterogeneous workers and firms, where labor markets clear through a one-to-many sorting mechanism. Firms determine both the number and composition of their employees, shaping (1) the income distribution among workers and (2) the productivity distribution across firms. We study business cycles driven by market efficiency shocks that disproportionately benefit more productive firms. The model's implications are consistent with empirical regularities on the cyclical behavior of wage and productivity distributions.

econ.TH↗

arXiv2024

The Pond Dilemma with Heterogeneous Relative Concerns

This paper explores team formation when workers differ in skills and their desire to out-earn co-workers. I cast this question as a two-dimensional assignment problem with imperfectly transferable utility and show that equilibrium sorting optimally trades off output maximisation with the need to match high-skill workers to co-workers with weak relative concerns. This can lead to positive (negative) assortative matching in skill even with submodular (supermodular) production functions. Under supermodular production, this heterogeneity in preferences benefits all workers and reduces wage inequality. With submodular production, the distributional consequences are ambiguous, and some workers become worse off. The model reveals that skill-biased technological change (SBTC) incentivises domestic outsourcing, as firms seek to avoid detrimental social comparisons between high- and low-skill workers, thus providing a compelling explanation for the long-term increase in outsourcing. Finally, the benefits of SBTC can trickle down to low-skill workers-but only those whose relative concerns are weak.

econ.TH↗

arXiv2024

A Firm Link: Overall, Between- and Within-Firm Inequality Through the Lens of a Sorting Model

This paper provides a new theory of the observed co-movement between overall wage inequality and its between-firm component. We develop and solve analytically a frictionless sorting model with two-sided heterogeneity, in which firms consist of distributions of tasks, choose how many workers to employ and reward their workers both through wages and amenities. We show that, for empirically-relevant parameter ranges, overall and between-firm inequality are firmly linked: A change in any of the models' primitives increases overall wage inequality if and only if it also increases the ratio of between-firm to overall inequality. Subsequently, we calibrate the model to match the Norwegian economy and find that the increase in wage inequality from 1995 to 2014 had a different primary cause (raising span-of-control cost) than the accompanying rise in welfare inequality (increased skill variance), and that the apparent decrease in wage inequality after 2015 masked a continued increase in welfare inequality.

econ.TH↗