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Talent, Labor Quality, and Economic Development

Author

Listed:
  • German Cubas

    (University of Houston)

  • B. Ravikumar

    (Federal Reserve Bank of St. Louis)

  • Gustavo Ventura

    (Arizona State University)

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 quality 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 Mincerian measure of labor quality. In our model, the resulting elasticity of output per worker with respect to TFP is about 2. (Copyright: Elsevier)

Suggested Citation

  • German Cubas & B. Ravikumar & Gustavo Ventura, 2016. "Talent, Labor Quality, and Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 160-181, July.
    • Handle: RePEc:red:issued:14-15
    DOI: 10.1016/j.red.2015.06.004
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    Cited by:

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    2. Córdoba, Juan Carlos & Ripoll, Marla, 2013. "What explains schooling differences across countries?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 184-202.
    3. Posso, Alberto, 2023. "Bilingual education and child labor: Lessons from Peru," Journal of Economic Behavior & Organization, Elsevier, vol. 212(C), pages 840-872.
    4. 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.
    5. Obiols-Homs, F. & Sánchez-Marcos, V., 2018. "Education outcomes and the labor market," Labour Economics, Elsevier, vol. 54(C), pages 14-28.
    6. International Monetary Fund, 2015. "Chile: Selected Issues," IMF Staff Country Reports 2015/228, International Monetary Fund.
    7. Cui, Yanfang & Li, Li & Lei, Yalin & Wu, Sanmang, 2024. "The performance and influencing factors of high-quality development of resource-based cities in the Yellow River basin under reducing pollution and carbon emissions constraints," Resources Policy, Elsevier, vol. 88(C).
    8. Kanat Abdulla & Balzhan Serikbayeva & Yessengali Oskenbayev & Farhad Taghizadeh-Hesary, 2022. "Regional Differences in Human Capital and Occupational Choice: Evidence from Mexico," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(6), pages 2899-2922, December.
    9. 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.
    10. 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.
    11. Zhang, Yi & Kumar, Sanjay & Huang, Xianhai & Yuan, Yiming, 2023. "Human capital quality and the regional economic growth: Evidence from China," Journal of Asian Economics, Elsevier, vol. 86(C).
    12. Wei, Wei & Zhang, Wan-Li & Wen, Jun & Wang, Jun-Sheng, 2020. "TFP growth in Chinese cities: The role of factor-intensity and industrial agglomeration," Economic Modelling, Elsevier, vol. 91(C), pages 534-549.
    13. Yao, Yao, 2016. "Higher education expansion, economic reform and labor productivity," Working Paper Series 19506, Victoria University of Wellington, School of Economics and Finance.
    14. Lutz Hendricks & Todd Schoellman, 2018. "Human Capital and Development Accounting: New Evidence from Wage Gains at Migration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 665-700.
    15. 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.
    16. Yao, Yao, 2016. "Higher education expansion, economic reform and labor productivity," Working Paper Series 5357, Victoria University of Wellington, School of Economics and Finance.
    17. Brotherhood, Luiz & Delalibera, Bruno R., 2020. "Minding the gap between schools and universities," Journal of Economic Dynamics and Control, Elsevier, vol. 120(C).
    18. Meijuan Wang & Donghua Yu & Haiqian Chen & Yang Li, 2022. "Comprehensive Measurement, Spatiotemporal Evolution, and Spatial Correlation Analysis of High-Quality Development in the Manufacturing Industry," Sustainability, MDPI, vol. 14(10), pages 1-19, May.
    19. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2015. "Education, Occupation-Mismatch and Unemployment," Working Papers 807, Barcelona School of Economics.
    20. Yao, Yao, 2019. "Does higher education expansion enhance productivity?," Journal of Macroeconomics, Elsevier, vol. 59(C), pages 169-194.
    21. Marika Santoro, 2015. "Long-term Gain, Short-Term Pain: Assessing the Potential Impact of Structural Reforms in Chile," IMF Working Papers 2015/282, International Monetary Fund.
    22. Yongli Zhang & Sanggyun Na & Jianguang Niu & Beichen Jiang, 2018. "The Influencing Factors, Regional Difference and Temporal Variation of Industrial Technology Innovation: Evidence with the FOA-GRNN Model," Sustainability, MDPI, vol. 10(1), pages 1-19, January.

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    More about this item

    Keywords

    Economic development; TFP; PISA; Labor quality;
    All these keywords.

    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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