| Summary: | In the first chapter of this work, I study the sorting of workers to firms, when firm size is explicitly taken into account. I develop a method to non-parametrically identify match production function from data on workers' wages and firms' revenues and posted job vacancies. Under the proposed identification procedure, ordering of workers and firms is identified independently, and can therefore be achieved using potentially different data sets. The model sheds light on the question of exporter wage premium: exporters pay higher wages because they are larger, and higher wages are required to support a larger firm size. In the second chapter we elaborate on Anas' (2004) impossibility theorem, which states that monopolistic competition or economies of scale alone are insufficient to explain the growth of cities in response to growing population or decreasing trade costs (under constant urban costs); cities shrink. To enhance the realism of assumptions, instead of Anas' normative approach, we introduce migration and developers' equilibria and another sector. Still, "vanishing" remains robust! Ultimately, we argue that the "vanishing" mechanism looks realistic and can have an explanatory power: industries, free of externalities, should locate in small towns. Moreover, the comparative statics shows how such...
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