IQ, Social Mobility and Growth
AbstractIntelligent agents may contribute to higher technological growth if assigned appropriate positions in the economy. These positive effects on growth are unlikely to be internalized on a competitive labour market. The allocation of talent depends on the relative award the market assigns to intelligence versus other individual merits, which will also influence intergenerational social mobility. To illustrate this, we present an endogenous growth model where each agent can choose to be a worker or an entrepreneur. The reward to entrepreneurs is an endogenous function of the abilities they have been endowed by nature as well as of the amount of knowledge and other social assets they inherit from their parents. When growth is low, the equilibrium in the labour market implies that the reward to entrepreneurs depends more on social assets than on intelligence. This gives children of entrepreneurs a large ex-ante advantage over children of workers when working as entrepreneurs, which will cause low intergenerational social mobility and an inefficient allocation of human resources and, consequently, low growth. Conversely, there is also a stable equilibrium with high growth which mitigates the inefficiencies generated by the labour market and implies high intergenerational social mobility.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1827.
Date of creation: Mar 1998
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Other versions of this item:
- Hassler, John & Mora , José V. Rodríguez, 1998. "IQ, Social Mobility and Growth," Seminar Papers 635, Stockholm University, Institute for International Economic Studies.
- Hassler, J. & Rodriguez Mora, J.V., 1998. "IQ, Social Mobility and Growth," Papers 635, Stockholm - International Economic Studies.
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
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