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The Allocation of Talent: Evidence from the Market of Economists

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  • Boehm, Michael J.
  • Watzinger, Martin

Abstract

Recent research in labor economics has highlighted the substantial and long-lasting adverse effect of recessions on employment prospects and earnings. In this paper, we study whether individuals react to these shocks by changing career paths and thereby affect the selection of talent into sectors. More concretely, we examine how the publication success and career choice of graduates from the leading US economics PhD programs varies with the state of the business cycle at application and at graduation. Our results strongly support the predictions of a Roy-style model of self-selection into sectors: We find that adverse macroeconomic conditions at application lead to a substantially more productive selection of individuals into academia and at graduation they lead to more PhDs deciding to stay in academia.

Suggested Citation

  • Boehm, Michael J. & Watzinger, Martin, 2010. "The Allocation of Talent: Evidence from the Market of Economists," MPRA Paper 27463, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27463
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    More about this item

    Keywords

    Sectoral Selection; Skill Composition; Business Cycle; Careers;
    All these keywords.

    JEL classification:

    • I29 - Health, Education, and Welfare - - Education - - - Other
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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