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The allocation of talent over the business cycle and its effect on sectoral productivity

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Listed:
  • Boehm, Michael J.
  • Watzinger, Martin

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

  • Boehm, Michael J. & Watzinger, Martin, 2012. "The allocation of talent over the business cycle and its effect on sectoral productivity," LSE Research Online Documents on Economics 121927, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121927
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    References listed on IDEAS

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    1. Bedard, Kelly & Herman, Douglas A., 2008. "Who goes to graduate/professional school? The importance of economic fluctuations, undergraduate field, and ability," Economics of Education Review, Elsevier, vol. 27(2), pages 197-210, April.
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    More about this item

    Keywords

    talent allocation; sectoral productivity; business cycle; roy model; PhD economists;
    All these keywords.

    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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