← Search

The Allocation of Talent: Implications for Growth

Kevin Murphy¹; Andrei Shleifer²; Robert W. Vishny¹

¹ University of Chicago · ² Harvard University Press

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.

DOI

10.2307/2937945

Volume

106 (2)

Pages

503

Export

BibTeX

Sources

openalex crossref