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Talent, Labor Quality and Economic Development

German Cubas (), B Ravikumar and Gustavo Ventura

No 2012010, Documentos de trabajo from Banco Central del Uruguay

Abstract: We develop a quantitative theory of labor quality based on the division of the labor force between unskilled and skilled workers, and investments in the quality of skilled labor. We use the theory to quantify the importance labor quality and Total Factor Productivity for cross-country income differences. A central ingredient in our analysis is the observed achievement levels (talent) constructed from PISA scores in a sample of 59 countries. Our findings imply that the cross-country differences in the quality of labor are almost twice as large as the conventional measures using Mincer returns. Thus, the implied disparities in TFP levels are smaller. The elasticity of output per worker with respect to TFP is about 2.3. We find no support for the hypothesis of skill-biased technology differences across countries.

Keywords: PISA; Labor Quality; TFP; Economic Development (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012-07
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Related works:
Journal Article: Talent, Labor Quality, and Economic Development (2016) Downloads
Working Paper: Talent, labor quality, and economic development (2013) Downloads
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