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The Allocation of Talent: Evidence from the Market of Economists

Michael J. Boehm and Martin Watzinger

MPRA Paper from University Library of Munich, Germany

Abstract: Recent research in labor economics has highlighted the substantial and long-lasting adverse effect of recessions on employment prospects and earnings. In this paper, we study whether individuals react to these shocks by changing career paths and thereby affect the selection of talent into sectors. More concretely, we examine how the publication success and career choice of graduates from the leading US economics PhD programs varies with the state of the business cycle at application and at graduation. Our results strongly support the predictions of a Roy-style model of self-selection into sectors: We find that adverse macroeconomic conditions at application lead to a substantially more productive selection of individuals into academia and at graduation they lead to more PhDs deciding to stay in academia.

Keywords: Sectoral Selection; Skill Composition; Business Cycle; Careers (search for similar items in EconPapers)
JEL-codes: I29 J24 J44 (search for similar items in EconPapers)
Date: 2010-06
New Economics Papers: this item is included in nep-lab and nep-sog
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