The Allocation of Talent: Implications for Growth

44 Pages Posted: 5 Jul 2004 Last revised: 26 Aug 2010

See all articles by Kevin M. Murphy

Kevin M. Murphy

University of Chicago; National Bureau of Economic Research (NBER)

Andrei Shleifer

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Robert W. Vishny

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Date Written: December 1990

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.

Suggested Citation

Murphy, Kevin M. and Shleifer, Andrei and Vishny, Robert W., The Allocation of Talent: Implications for Growth (December 1990). NBER Working Paper No. w3530. Available at SSRN: https://ssrn.com/abstract=226816

Kevin M. Murphy (Contact Author)

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Andrei Shleifer

Harvard University - Department of Economics ( email )

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European Corporate Governance Institute (ECGI)

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Robert W. Vishny

University of Chicago - Booth School of Business ( email )

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312-702-0118 (Fax)

National Bureau of Economic Research (NBER)

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