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The Economics of Rising Stars

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  • MacDonald, Glenn M

Abstract

This paper analyzes an occupation in which there is substantial uncertainty about individual performance and past performance is correlated with future outcomes. In equilibrium, only the young enter the occupation and only the successful stay on. The young are numerous and earn incomes well below what their current alternative o ffers; success is rare and rewarded highly. The implied distribution of earnings must have positive skewness. Copyright 1988 by American Economic Association.

Suggested Citation

  • MacDonald, Glenn M, 1988. "The Economics of Rising Stars," American Economic Review, American Economic Association, vol. 78(1), pages 155-166, March.
  • Handle: RePEc:aea:aecrev:v:78:y:1988:i:1:p:155-66
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    References listed on IDEAS

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    1. Calvo, Guillermo A & Kotlikoff, Laurence J & Rodriguez, Carlos Alfredo, 1979. "The Incidence of a Tax on Pure Rent: A New (?) Reason for an Old Answer," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 869-874, August.
    2. Kareken, John & Wallace, Neil, 1977. "Portfolio autarky: A welfare analysis," Journal of International Economics, Elsevier, pages 19-43.
    3. Buiter, Willem H, 1981. "Time Preference and International Lending and Borrowing in an Overlapping-Generations Model," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 769-797, August.
    4. J. Bhagwati & R. Brecher, 1978. "National Welfare in an Open Economy in the Presence of Foreign Owned Factors of Production," Working papers 224, Massachusetts Institute of Technology (MIT), Department of Economics.
    5. Srinivasan, T. N., 1983. "International factor movements, commodity trade and commercial policy in a specific factor model," Journal of International Economics, Elsevier, pages 289-312.
    6. Brecher, Richard A. & Findlay, Ronald, 1983. "Tariffs, foreign capital and national welfare with sector-specific factors," Journal of International Economics, Elsevier, pages 277-288.
    7. John Dutton, 1982. "The Optimal Taxation of International Investment Income: A Comment," The Quarterly Journal of Economics, Oxford University Press, vol. 97(2), pages 373-380.
    8. Jonathan Eaton, 1987. "A Dynamic Specific-Factors Model of International Trade," Review of Economic Studies, Oxford University Press, vol. 54(2), pages 325-338.
    9. Bhagwati, Jagdish N. & Brecher, Richard A., 1980. "National welfare in an open economy in the presence of foreign-owned factors of production," Journal of International Economics, Elsevier, pages 103-115.
    10. Christophe Chamley & Wright, Brian D. Wright, 1983. "Fiscal Incidence in a Dynamic Life-Cycle Model with Land," Cowles Foundation Discussion Papers 666, Cowles Foundation for Research in Economics, Yale University.
    11. Feldstein, Martin S, 1977. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 349-360, April.
    12. Bhagwati, Jagdish N. & Tironi, Ernesto, 1980. "Tariff change, foreign capital and immiserization : A theoretical analysis," Journal of Development Economics, Elsevier, pages 71-83.
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