Institutions and the Allocation of Talent: Evidence from Russian Regions

CAEPR WORKING PAPER SERIES 2019-003

38 Pages Posted: 20 Sep 2019

See all articles by Michael Alexeev

Michael Alexeev

Indiana University Bloomington - Department of Economics; Russian Presidential Academy of National Economy and Public Administration

Timur Natkhov

National Research University Higher School of Economics

Leonid Polishchuk

National Research University Higher School of Economics

Date Written: July 22, 2019

Abstract

Strong institutions attract talent to productive activities, whereas weak ones raise the appeal of redistribution and rent-seeking. We propose a theory that describes the impact of institutions on occupational choices over a range of abilities, and predicts that the sensitivity of such choices to the quality of institutions rises in talent when the latter increases from low to intermediate levels, and declines thereafter. To test these predictions empirically, we use a unique micro data set describing the choices of fields of studies by newly enrolled university students in Russian regions in 2011-2014. We show that the popularity of sciences and engineering, on one hand, and law and public administration, on the other, are linked to the quality of regional investment climate and other measures of institutional quality in a manner predicted by our theory. This confirms that investments in human capital reflect the quality of institutions, pointing to a mechanism connecting institutions to economic outcomes.

Keywords: institutions, allocation of talent, rent-seeking, human capital

JEL Classification: D02, I25, J24, O43

Suggested Citation

Alexeev, Michael V. and Natkhov, Timur and Polishchuk, Leonid, Institutions and the Allocation of Talent: Evidence from Russian Regions (July 22, 2019). CAEPR WORKING PAPER SERIES 2019-003. Available at SSRN: https://ssrn.com/abstract=3451969 or http://dx.doi.org/10.2139/ssrn.3451969

Michael V. Alexeev (Contact Author)

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall 105
Bloomington, IN 47405-6620
United States

Russian Presidential Academy of National Economy and Public Administration ( email )

pr. Vernadskogo, 84
Moscow, 119571
Russia

Timur Natkhov

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

Leonid Polishchuk

National Research University Higher School of Economics ( email )

Myasnitskaya street, 20
Moscow, Moscow 119017
Russia

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