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.

Journal Article The Euclidean Distance Approach to Continuous Utility Functions Get access Ghanshyam Mehta Ghanshyam Mehta University of Queensland, Australia Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 106, Issue 3, August 1991, Pages 975–977, https://doi.org/10.2307/2937938 Published: 01 August 1991

We examine the connection between exchange rates and foreign direct investment that arises when globally integrated capital markets are subject to informational imperfections. These imperfections cause external financing to be more expensive than internal financing, so that changes in wealth translate into changes in the demand for direct investment. By systematically lowering the relative wealth of domestic agents, a depreciation of the domestic currency can lead to foreign acquisitions of certain domestic assets. We develop a simple model of this phenomenon and test for its relevance in determining international capital flows.

We establish that season of birth is related to educational attainment because of school start age policy and compulsory school attendance laws. Individuals born in the beginning of the year start school at an older age, and can therefore drop out after completing less schooling than individuals born near the end of the year. Roughly 25 percent of potential dropouts remain in school because of compulsory schooling laws. We estimate the impact of compulsory schooling on earnings by using quarter of birth as an instrument for education. The instrumental variables estimate of the return to education is close to the ordinary least squares estimate, suggesting that there is little bias in conventional estimates.

The Penn World Table displays a set of national accounts economic time series covering many countries. Its expenditure entries are denominated in a common set of prices in a common currency so that real quantity comparisons can be made, both between countries and over time. It also provides information about relative prices within and between countries, as well as demographic data and capital stock estimates. This updated, revised, and expanded Mark 5 version of the table includes more countries, years, and variables of interest to economic researchers. The Table is available on personal computer diskettes and through BITNET.

Flavio Delbono, Vincenzo Denicolo; Incentives to Innovate in a Cournot Oligopoly*, The Quarterly Journal of Economics, Volume 106, Issue 3, 1 August 1991, Pages

Journal Article The Enforcement of Equal Opportunity Laws Under Imperfect Information: Affirmative Action and Alternatives Get access Shelly J. Lundberg Shelly J. Lundberg University of Washington Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 106, Issue 1, February 1991, Pages 309–326, https://doi.org/10.2307/2937919 Published: 01 February 1991

This paper studies determinants of the geographic distribution of unemployment in the United States since 1950. We argue that “equilibrium” differences in unemployment among markets are partially supported by corresponding differences in the covariance structure of sectoral demands for labor. When workers are mobile, greater diversification of sectoral demands reduces unemployment. We confirm this point using pooled time-series-cross-section data on state unemployment and employment by industry. We also find evidence for nonneutrality of aggregate disturbances based on geographic differences in industrial composition, and that permanent changes in the sectoral composition of employment lead to transitory fluctuations in unemployment

Formulates a stochastic dynamic model of fertility to evaluate the assumptions that underlie the widely used econometric tests for parental sex preferences. Unlike previous work on dynamic models of fertility, several tractable and testable predictions are established. It is shown rigorously that conventional econometric tests using fertility data are valid tests for sex preferences; however, they cannot separate son preference from daughter preference. The only definite conclusion that one can draw from fertility data is whether there are sex preferences. These results call into question the validity of conventional econometric tests for son preference. -Author

James B. Rebitzer, Lowell J. Taylor; A Model of Dual Labor Markets When Product Demand Is Uncertain*, The Quarterly Journal of Economics, Volume 106, Issue 4, 1