Theoretical Economics 19 (2024), 1261–1304

We introduce a model of large many-to-one matching markets with occupational choice where each individual can choose which side of the market to belong to. We show that stable matchings exist under mild assumptions; in particular, both complementarities and externalities can be accommodated. Our model generalizes Greinecker and Kah (2021), which focuses on one-to-one matching and did not allow for occupational choice. Applications include the roommate problem with non-atomic participants, explaining the size and distribution of firms and wage inequality.

Keywords: Occupational choice, stability, complementarity, externalities, large economy

JEL classification: C78, D47