Research / BFI Working PaperJun 18, 2019

The Allocation of Talent and U.S. Economic Growth

Chang-Tai Hsieh, Erik Hurst, Charles I. Jones, Peter J. Klenow

In 1960, 94 percent of doctors and lawyers were white men. By 2010, the fraction was just 62 percent. Similar changes in other highly-skilled occupations have occurred throughout the U.S. economy during the last fifty years. Given that the innate talent for these professions is unlikely to have changed differently across groups, the change in the occupational distribution since 1960 suggests that a substantial pool of innately talented women and black men in 1960 were not pursuing their comparative advantage. We examine the effect on aggregate productivity of the convergence in the occupational distribution between 1960 and 2010 through the prism of a Roy model. Across our various specifications, between 20% and 40% of growth in aggregate market output per person can be explained by the improved allocation of talent.

More Research From These Scholars

BFI Working Paper Jan 16, 2019

The Aggregate Implications of Regional Business Cycles

Martin Beraja, Juan Ospina, Erik Hurst
Topics:  Fiscal Studies, Monetary Policy, Economic Mobility & Poverty, Technology & Innovation
BFI Working Paper Oct 16, 2019

The Return to Capital in China

Chong-En Bai, Chang-Tai Hsieh, Yingyi Qian
Topics:  Uncategorized
BFI Working Paper Apr 2, 2018

The Transformation of Manufacturing and the Decline in U.S. Employment

Kerwin Kofi Charles, Erik Hurst, Mariel Schwartz
Topics:  Economic Mobility & Poverty, Employment & Wages, K-12 Education, Industrial Organization, Fiscal Studies, Financial Markets