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IQ, Social Mobility and Growth

Author

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  • Hassler, John

    () (Institute for International Economic Studies, Stockholm University)

  • Mora , José V. Rodríguez

    () (Department of Economics, Universitat Pompeu Fabra)

Abstract

Intelligent agents may contribute to higher technological growth, if assigned appropriate positions in the economy. These positive effects on growth are unlikely to be internalized on a competitive labor market. The allocation of talent depends on the relative award the market assigns to intelligence versus other individual merits, which will also influence intergenerational social mobility. To illustrate this, we present an endogenous growth model where each agent can choose to be a worker or an entrepreneur. The reward to entrepreneurs is an endogenous function of the abilities they have been endowed by nature as well as of the amount of knowledge and other social assets they inherit from their parents. When growth is low, the equilibrium in the labor market implies that the reward to entrepreneurs depends more on social assets than on intelligence. This gives children of entrepreneurs a large ex-ante advantage over children of workers when working as entrepreneurs, which will cause low intergenerational social mobility and an ineffcient allocation of human resources and, consequently, low growth. On the other hand, there is also a stable equilibrium with high growth which mitigates the ineffciencies generated by the labor market and implies high intergenerational social mobility.

Suggested Citation

  • Hassler, John & Mora , José V. Rodríguez, 1998. "IQ, Social Mobility and Growth," Seminar Papers 635, Stockholm University, Institute for International Economic Studies.
  • Handle: RePEc:hhs:iiessp:0635
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    References listed on IDEAS

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    Cited by:

    1. Lars E. O. Svensson, 2000. "The First Year of the Eurosystem: Inflation Targeting or Not?," American Economic Review, American Economic Association, pages 95-99.
    2. Daron Acemoglu & Philippe Aghion & Fabrizio Zilibotti, 2006. "Distance to Frontier, Selection, and Economic Growth," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 37-74, March.
    3. Schneider, Andrea, 2010. "Redistributive taxation vs. education subsidies: Fostering equality and social mobility in an intergenerational model," Economics of Education Review, Elsevier, vol. 29(4), pages 597-605, August.
    4. Assar Lindbeck, 2002. "Pensions and Contemporary Socioeconomic Change," NBER Chapters,in: Social Security Pension Reform in Europe, pages 19-48 National Bureau of Economic Research, Inc.
    5. Mishkin, Frederic S., 1998. "International Experiences With Different Monetary Policy Regimes," Seminar Papers 648, Stockholm University, Institute for International Economic Studies.
    6. Lindbeck, A., 1998. "Swedish Lessons for Post-Socialist Countries," Papers 645, Stockholm - International Economic Studies.
    7. Lykke Andersen, 2001. "Social Mobility in Latin America: Links with Adolescent Schooling," Research Department Publications 3130, Inter-American Development Bank, Research Department.
    8. Persson, Mats, 2000. "Five Fallacies in the Social Security Debate," Seminar Papers 686, Stockholm University, Institute for International Economic Studies.
    9. Thomas Otter, 2009. "Does Inequality Harm Income Mobility and Growth? An Assessment of the Growth Impact of Income and Education Inequality in Paraguay 1992-2002," Ibero America Institute for Econ. Research (IAI) Discussion Papers 188, Ibero-America Institute for Economic Research.
    10. Andersen, Lykke E., 2010. "Social Mobility in Bolivia is Finally Improving!," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 13, pages 117-136.
    11. Taylor, John B., 1999. "The robustness and efficiency of monetary policy rules as guidelines for interest rate setting by the European central bank," Journal of Monetary Economics, Elsevier, vol. 43(3), pages 655-679, June.
    12. Lindbeck, A. & Wikstrom, S., 1999. "The ICT Revoluation in Consumer Product Markets," Papers 670, Stockholm - International Economic Studies.

    More about this item

    Keywords

    Intergenerational social mobility; intelligence; growth;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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