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Integrating Roy with Becker, this paper studies occupational choice and matching in the labor market. Our model generates occupation earnings distributions which are right skewed, have firm fixed effects, and large changes in aggregate earnings inequality without significant changes in within firm inequality. The estimated model fits the earnings distribution both across and within firms in Brazil in 1999. It shows that the recent decrease in aggregate Brazilian earnings inequality is largely due to the increase in her educational attainment over the same years. A simulation of skilled biased technical change in the model also qualitatively fits the recent changes in earnings inequality in the United States.

This paper presents a tractable framework for studying frictionless matching in school, work, and marriage when individuals have heterogeneous social and cognitive skills. In the model, there are gains to specialization and team production, but specialization requires communication and coordination between team members, and individuals with more social skills communicate and coordinate at lower resource cost. The theory delivers full task specialization in the labor and education markets, but incomplete specialization in marriage. It also captures well-known matching patterns in each of these sectors, including the commonly observed many-to-one matches in firms and schools. Equilibrium is equivalent to the solution of an utilitarian social planner solving a linear programming problem.

Between 1958 and 1961, China experienced one of the worse famines in her history. Birth rates fell during these years and recovered immediately afterwards. The famine also adversely affected the health of these cohorts. This paper provides nonparametric estimates of the total effects of the famine on the marital behaviour of famine-affected cohorts in the rural areas of Sichuan and Anhui. These reduced from estimates incorporate general equilibrium and heterogeneous treatment effects, two important components of equilibrium marital behaviour. Next, the paper uses a structural model of the marriage market, the Choo-Siow model, to decompose observed marital outcomes into quantity and quality effects of the famine. The structural estimates show that the famine substantially reduced the marital attractiveness of the famine born cohort. The conclusion is that the small observed changes in marriage rates of the famine born cohorts are due to a substantial decline in their marital attractiveness. Controlling for changes in educational attainment does not change the conclusion.

The paper estimates how parents adjust bride-prices and land divisions to compensate their sons for differences in their schooling investments in rural China. The main estimate implies that when a son receives one yuan less in schooling investment than his brother, he will obtain 0.7 yuan more in observable marital and post-marital transfers as partial compensation. Controlling for unobserved household heterogeneity, planned consumption differences across sons, and a fuller accounting of lifetime transfers are quantitatively important. The empirical findings strongly support the unitary model as a model of resource allocation for sons in traditional agricultural families.