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Education and the Allocation of Talent

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  • Hans K. Hvide

    (Norwegian School of Economics and Business)

Abstract

I study how education affects the allocation of talent into different sectors of the economy. I focus on two forces. First, education adds to a worker's information capital and, thus, may change her self-confidence. Second, performance contracts give a worker incentives to choose a sector according to her abilities. The baseline model predicts that workers with intermediate ability educate, while the most able skip education. In an extension, I compare the U.K. and the U.S. bachelor's degrees and, moreover, discuss hybrid educational systems, common in Europe, that offer both U.K. and U.S. types of bachelor's degrees.

Suggested Citation

  • Hans K. Hvide, 2003. "Education and the Allocation of Talent," Journal of Labor Economics, University of Chicago Press, vol. 21(4), pages 945-976, October.
    • Handle: RePEc:ucp:jlabec:v:21:y:2003:i:4:p:945-944
    DOI: 10.1086/377028
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    References listed on IDEAS

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    1. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
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    4. Weiss, Andrew, 1983. "A Sorting-cum-Learning Model of Education," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 420-442, June.
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    Cited by:

    1. Philipp Sadowski, 2011. "Overeagerness," Levine's Working Paper Archive 661465000000001198, David K. Levine.
    2. Andreu, Laura & Pütz, Alexander, 2016. "Choosing two business degrees versus choosing one: What does it tell about mutual fund managers' investment behavior?," CFR Working Papers 12-01 [rev.2], University of Cologne, Centre for Financial Research (CFR).
    3. Sadowski, Philipp, 2016. "Overeagerness," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PA), pages 114-125.
    4. Tali Regev, 2007. "Imperfect information, self-selection and the market for higher education," Working Paper Series 2007-18, Federal Reserve Bank of San Francisco.
    5. Kim-Sau Chung & Peter Eso, 2007. "Signalling with Career Concerns," Discussion Papers 1443, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    6. Andreu, Laura & Serrano, Miguel & Vicente, Luis, 2019. "Efficiency of mutual fund managers: A slacks-based manager efficiency index," European Journal of Operational Research, Elsevier, vol. 273(3), pages 1180-1193.
    7. Anna Boisits & Roland Königsgruber, 2016. "Information acquisition and disclosure by firms in the presence of additional available information," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 24(1), pages 177-205, March.
    8. Harbaugh, Richmond & To, Theodore, 2020. "False modesty: When disclosing good news looks bad," Journal of Mathematical Economics, Elsevier, vol. 87(C), pages 43-55.
    9. Aloisio Araujo & Daniel Gottlieb & Humberto Moreira, 2007. "A model of mixed signals with applications to countersignalling," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1020-1043, December.
    10. Chung, Kim-Sau & Eső, Péter, 2013. "Persuasion and learning by countersignaling," Economics Letters, Elsevier, vol. 121(3), pages 487-491.
    11. Dina Mayzlin & Jiwoong Shin, 2011. "Uninformative Advertising as an Invitation to Search," Marketing Science, INFORMS, vol. 30(4), pages 666-685, July.
    12. Andreu, Laura & Puetz, Alexander, 2017. "Choosing two business degrees versus choosing one: What does it tell about mutual fund managers' investment behavior?," Journal of Business Research, Elsevier, vol. 75(C), pages 138-146.
    13. Andrés Solimano, 2006. "The International Mobility of Talent and its Impact on Global Development," WIDER Working Paper Series DP2006-08, World Institute for Development Economic Research (UNU-WIDER).
    14. Luis Santos-Pinto, 2011. "Labor Market Signaling and Self-Confidence: Wage Compression and the Gender Pay Gap N.B.: This paper replaces Nr 10.07 "Labor Market Signaling with Overconfident Workers" (June 2010)," Cahiers de Recherches Economiques du Département d'économie 11.07, Université de Lausanne, Faculté des HEC, Département d’économie.
    15. Orzach, Ram & Tauman, Yair, 2005. "Strategic dropouts," Games and Economic Behavior, Elsevier, vol. 50(1), pages 79-88, January.
    16. Hvide, Hans K., 2002. "Pragmatic beliefs and overconfidence," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 15-28, May.

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