This paper studies how individuals' education choices interact with the organization of firms. Agents that differ in ability decide whether to undertake a costly, risky investment in education before sorting into occupations as workers or managers. Managers match with workers to form firms, helping them produce. Crucially, education choices depend on expected earnings, which, in turn, are shaped by aggregate education decisions through the occupational sorting and matching they induce. We show the equilibrium is unique and derive comparative statics. Although the effects are a priori ambiguous, we provide a condition for signing the effects of lower costs of managerial help, and show when this can lead to less investment. Lower education costs, however, unambiguously increase investment, raising wages, lowering rents, and reallocating employment towards larger firms. On the other hand, improvements in the distribution of education outcomes can lead to a decrease in equilibrium investment. Even when fewer agents invest, wages rise for a positive mass of workers.

Economic agents are often uncertain about their valuations for goods or services. Learning about said goods/services allows them to reduce this uncertainty. What does trade look like when a buyer and a seller with unknown and interdependent valuations are able to learn in private? We explore this question in a stylized bilateral trade model where a seller privately observes a signal before pricing the good. Before observing the price, the buyer flexibly acquires a signal at a cost that increases in informativeness. We find that when information is free, the seller extracts all the surplus whenever there is trade. As a result, equilibria are Pareto-ranked: the best equilibrium is the one where full information is acquired and a worst equilibrium is one where no learning takes place. We show that for positive but vanishing costs, prices must eventually convey information.