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The Allocation of Talent over the Business Cycle and its Effect on Sectoral Productivity

Author

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  • Michael Boehm
  • Martin Watzinger

Abstract

It is well documented that graduates enter different occupations in recessions than in booms. In this article, we examine the impact of this reallocation for long-term productivity and output across sectors. We develop a model in which talent flows to stable sectors in recessions and to cyclical sectors in booms. We find evidence for the predicted change in productivity caused by the business cycle in a setting where output can be readily measured: economists starting or graduating from their PhD in a recession are significantly more productive over the long term than economists starting or graduating in a boom.

Suggested Citation

  • Michael Boehm & Martin Watzinger, 2012. "The Allocation of Talent over the Business Cycle and its Effect on Sectoral Productivity," CEP Discussion Papers dp1143, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1143
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    File URL: http://cep.lse.ac.uk/pubs/download/dp1143.pdf
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    References listed on IDEAS

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    1. Richard Freeman & John Van Reenen, 2009. "What If Congress Doubled R&D Spending on the Physical Sciences?," Innovation Policy and the Economy, University of Chicago Press, vol. 9(1), pages 1-38.
    2. George J. Borjas & Kirk B. Doran, 2012. "The Collapse of the Soviet Union and the Productivity of American Mathematicians," The Quarterly Journal of Economics, Oxford University Press, vol. 127(3), pages 1143-1203.
    3. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
    4. Fane Groes & Philipp Kircher & Iourii Manovskii, 2015. "The U-Shapes of Occupational Mobility," Review of Economic Studies, Oxford University Press, vol. 82(2), pages 659-692.
    5. Devereux, Paul J., 2002. "The Importance of Obtaining a High-Paying Job," MPRA Paper 49326, University Library of Munich, Germany.
    6. Yuji Genda & Ayako Kondo & Souichi Ohta, 2010. "Long-Term Effects of a Recession at Labor Market Entry in Japan and the United States," Journal of Human Resources, University of Wisconsin Press, vol. 45(1).
    7. Oddbjørn Raaum & Knut Røed, 2006. "Do Business Cycle Conditions at the Time of Labor Market Entry Affect Future Employment Prospects?," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 193-210, May.
    8. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The impact of recessions on economist productivity
      by Economic Logician in Economic Logic on 2012-05-22 19:14:00
    2. [経済]不況期に学位を取得した経済学者は優秀
      by himaginary in himaginaryの日記 on 2012-05-24 12:00:00
    3. PhDs in gloomy times
      by Inaki Villanueva in Applied economist on 2012-07-24 23:08:00

    Citations

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    Cited by:

    1. Amuedo-Dorantes, Catalina & Furtado, Delia, 2016. "Settling for Academia? H-1B Visas and the Career Choices of International Students in the United States," IZA Discussion Papers 10166, Institute for the Study of Labor (IZA).
    2. Markus Nagler & Marc Piopiunik & Martin R. West, 2015. "Weak Markets, Strong Teachers: Recession at Career Start and Teacher Effectiveness," CESifo Working Paper Series 5454, CESifo Group Munich.
    3. John P. Conley & Ali Sina Önder & Benno Torgler, 2016. "Are all economics graduate cohorts created equal? Gender, job openings, and research productivity," Scientometrics, Springer;Akadémiai Kiadó, vol. 108(2), pages 937-958, August.
    4. Nagler, Markus & Piopiunik, Marc & West, Martin R., 2015. "Weak Markets, Strong Teachers," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112949, Verein für Socialpolitik / German Economic Association.
    5. John P. Conley & Ali Sina Onder & Benno Torgler, 2012. "Are all High-Skilled Coherts Created Equal? Unemployment, Gender, and Research Productivity," School of Economics and Finance Discussion Papers and Working Papers Series 293, School of Economics and Finance, Queensland University of Technology.

    More about this item

    Keywords

    Talent allocation; sectoral productivity; business cycle; roy model; PhD economists;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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