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Talent, labor quality, and economic development

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  • German Cubas
  • B. Ravikumar
  • Gustavo Ventura

Abstract

We develop a theory of labor quality based on (i) the division of the labor force> between unskilled and skilled workers and (ii) investments in skilled workers. In our> theory, countries differ in two key dimensions: talent and total factor productivity> (TFP). We measure talent using the observed achievement levels from the Programme> for International Student Assessment (PISA) scores. Our findings imply that the qual-> ity of labor in rich countries is about twice as large as the quality in poor countries.> Thus, the implied disparities in TFP levels are smaller relative to the standard growth> model using a measure of labor quality based on Mincer returns. In our model, the> resulting elasticity of output per worker with respect to TFP is about 2.

Suggested Citation

  • German Cubas & B. Ravikumar & Gustavo Ventura, 2013. "Talent, labor quality, and economic development," Working Papers 2013-027, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:2013-027
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    Cited by:

    1. Córdoba, Juan Carlos & Ripoll, Marla, 2013. "What explains schooling differences across countries?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 184-202.
    2. Marika Santoro, 2015. "Long-term Gain, Short-Term Pain; Assessing the Potential Impact of Structural Reforms in Chile," IMF Working Papers 15/282, International Monetary Fund.
    3. Restuccia, Diego, 2014. "Barriers to capital accumulation in a model of technology adoption and schooling," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 81-91.
    4. Dhritman Bhattacharya & Nezih Guner & Gustavo Ventura, 2013. "Distortions, Endogenous Managerial Skills and Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 11-25, January.
    5. Yao, Yao, 2016. "Higher education expansion, economic reform and labor productivity," Working Paper Series 5357, Victoria University of Wellington, School of Economics and Finance.
    6. Nezih Guner & Andrii Parkhomenko & Gustavo Ventura, 2018. "Managers and Productivity Differences," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 29, pages 256-282, July.
    7. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2015. "Education, Occupation-Mismatch and Unemployment," Working Papers 807, Barcelona Graduate School of Economics.
    8. Todd Schoellman & Lutz Hendricks, 2016. "Human Capital and Development Accounting: New Evidence from Wage Gains at Migration," 2016 Meeting Papers 159, Society for Economic Dynamics.
    9. Marti Mestieri & Johanna Schauer & Robert Townsend, 2017. "Human Capital Acquisition and Occupational Choice: Implications for Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 151-186, April.
    10. International Monetary Fund, 2015. "Chile; Selected Issues," IMF Staff Country Reports 15/228, International Monetary Fund.
    11. repec:gam:jsusta:v:10:y:2018:i:1:p:187-:d:126983 is not listed on IDEAS

    More about this item

    Keywords

    Economic development ; Education - Economic aspects ; Labor productivity;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General

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