Skill Diversity and Leadership in Team Production

Abstract

Using a team-production model with heterogeneous workers, we examine the short- and long-run efficiency effects of skill diversity and leadership in teams. Our analysis focuses on workers' strategic incentives to manipulate their skills. In the short run, heterogeneous pairing (pairing workers with different skills) yields a greater total production than homogeneous pairing. However, in the long run, homogeneous paring may yield a greater total production because of gradual improvements in workers' skill. We also show new potential benefits of leadership: assigning a leader to a team yields a smaller total production in the short run, but, a greater production in the long run by preventing workers from consistently reducing their skills.