NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Allocation of Talent: Implications for Growth

Kevin M. Murphy, Andrei Shleifer, Robert W. Vishny

NBER Working Paper No. 3530
Issued in December 1990
NBER Program(s):   EFG

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.

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Document Object Identifier (DOI): 10.3386/w3530

Published: The Quarterly Journal of Economics, Vol. CVI, pp. 503-530, May 1991. citation courtesy of

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