LAUSR

This paper develops a multi-country, multi-sector, and multi-factor model of two-sided matching between heterogeneous workers and entrepreneurs in which agents in different countries can form cross-country teams. Sorting, matching, and sharing problems are all considered in a unified framework. Equilibrium is characterized by endogenous sharing rules, which break away from competitive marginal productivity theories of factor returns. I illustrate that a reduction in the cost of sector-specific matching can increase welfare for all agents without conflicts of interest, and that a bilateral economic integration agreement can affect the welfare of agents in an unrelated third country. Furthermore, I demonstrate that rising income inequality can be accompanied by strengthening negative assortative matching.