An assignment problem is incorporated into a dynamic general-equilibrium model to explore a variety of issues in labor market fluctuations such as aggregate labor supply elasticity, skill premium, capital-skill complementarity, and the compositional bias in aggregate wages. Agents self-select into managerial, production, or non-market tasks based on comparative advantages. An equilibrium is characterized by a mapping from the skill distribution and production technology into the critical values of talent for job assignment. Investigation of the underlying assignment problem of workers enhances our understanding of aggregate economy and helps to resolve some important issues in equilibrium macroeconomics.