The Allocation of Talent: Implications for Growth

Kevin M. Murphy, Andrei Shleifer and Robert W. Vishny

No 3530, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A country's most talented people typically organize production by others, so they can spread their ability advantage over a larger scale. When they start firms, they innovate and foster growth, but when they become rent seekers, they only redistribute wealth and reduce growth. Occupational choice depends on returns to ability and to scale in each sector, on market size, and on compensation contracts. In most countries, rent seeking rewards talent more than entrepreneurship does, leading to stagnation. Our evidence shows that countries with a higher proportion of engineering college majors grow faster; whereas countries with a higher proportion of law concentrators grow slower.

Date: 1990-12
Note: EFG
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Related works:
Working Paper: The Allocation of Talent: Implicationsfor Growth (1990)
Journal Article: The Allocation of Talent: Implications for Growth (1991)
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