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Money, fame and the allocation of talent: Brain drain and the institution of science

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  • Doh-Shin Jeon
  • Domenico Menicucci

Abstract

The earning structure in science is known to be flat relative to the one in the private sector, which could cause a brain drain toward the private sector. In this paper, we assume that agents value both money and fame and study the role of the institution of science in the allocation of talent between the science sector and the private sector. Following works on the Sociology of Science, we model the institution of science as a mechanism distributing fame (i.e. peer recognition). We show that since the intrinsic performance is less noisy signal of talent in the science sector than in the private sector, a good institution of science can mitigate the brain drain. We also find that providing extra monetary incentives through the market might undermine the incentives provided by the institution and thereby worsen the brain drain. Finally, we study the optimal balance between monetary and non-monetary incentives in science.

Suggested Citation

  • Doh-Shin Jeon & Domenico Menicucci, 2005. "Money, fame and the allocation of talent: Brain drain and the institution of science," Economics Working Papers 805, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2005.
  • Handle: RePEc:upf:upfgen:805
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    References listed on IDEAS

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    Cited by:

    1. Gans, Joshua S. & Murray, Fiona E. & Stern, Scott, 2017. "Contracting over the disclosure of scientific knowledge: Intellectual property and academic publication," Research Policy, Elsevier, vol. 46(4), pages 820-835.
    2. Doh-Shin Jeon & Byung-Cheol Kim & Domenico Menicucci, 2015. "Price Discrimination by a Two-sided Platform: with Applications to Advertising and Privacy Design," Working Papers 15-08, NET Institute.
    3. Jeon, Doh-Shin & Kim, Byung-Cheol & Menicucci, Domenico, 2016. "Second-degree Price Discrimination by a Two-sided Monopoly Platform," TSE Working Papers 16-690, Toulouse School of Economics (TSE), revised Aug 2017.
    4. Dong, Baomin & Fu, Shihe & Gong, Jiong & Fan, Hanwen, 2014. "The Lame Drain," MPRA Paper 53825, University Library of Munich, Germany.

    More about this item

    Keywords

    Fame; Science; Brain Drain; Incentives; Asymmetric Information;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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