Money, Fame and the Allocation of Talent: Brain Drain, the Matthew Effect and the Institution of Science

UPF Economics and Business Working Paper 805

38 Pages Posted: 16 Nov 2005

See all articles by Doh-Shin Jeon

Doh-Shin Jeon

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Domenico Menicucci

Universita' degli Studi di Firenze

Date Written: Februrary 2005

Abstract

The earning structure in science is known to be flat relative to the one in the private sector, which could cause a brain drain toward the private sector. In this paper, we assume that agents value both money and fame and study the role of the institution of science in the allocation of talent between the science sector and the private sector. Following works on the Sociology of Science, we model the institution of science as a mechanism distributing fame (i.e. peer recognition). We show that since the intrinsic performance is less noisy signal of talent in the science sector than in the private sector, a good institution of science can mitigate the brain drain. We also find that providing extra monetary incentives through the market might undermine the incentives provided by the institution and thereby worsen the brain drain. Finally, we study the optimal balance between monetary and non monetary incentives in science.

Keywords: Fame, science, brain drain, incentives, asymmetric information

JEL Classification: D82, H21, H41, J24

Suggested Citation

Jeon, Doh-Shin and Menicucci, Domenico, Money, Fame and the Allocation of Talent: Brain Drain, the Matthew Effect and the Institution of Science (Februrary 2005). UPF Economics and Business Working Paper 805, Available at SSRN: https://ssrn.com/abstract=849424 or http://dx.doi.org/10.2139/ssrn.849424

Doh-Shin Jeon (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 16 57 (Phone)
(34) 93 542 17 46 (Fax)

Domenico Menicucci

Universita' degli Studi di Firenze ( email )

via delle pandette 9
Firenze, 50127
Italy
+39-055-4374666 (Phone)
+39-055-4374913 (Fax)

HOME PAGE: http://www.dmd.unifi.it/index.php?loc=personal&id=d.menicucci

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