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Institutions and the Allocation of Talent: Evidence from Russian Regions

Author

Listed:
  • Michael Alexeev

    (Indiana University, Bloomington, Indiana and the Russian Academy of National Economy and Public Administration (RANEPA), Moscow, Russia)

  • Timur Natkhov

    (National Research University Higher School of Economics, (HSE) University of Moscow, Russia)

  • Leonid Polishchuk

    (National Research University Higher School of Economics, (HSE) University of Moscow, Russia and Uppsala Center for Russian and Eurasian Studies)

Abstract

Strong institutions attract talent to productive activities, whereas weak ones raise the appeal of redistribution and rent-seeking. We propose a theory that describes the impact of institutions on occupational choices over a range of abilities, and predicts that the sensitivity of such choices to the quality of institutions rises in talent when the latter increases from low to intermediate levels, and declines thereafter. To test these predictions empirically, we use a unique micro data set describing the choices of fields of studies by newly enrolled university students in Russian regions in 2011-2014. We show that the popularity of sciences and engineering, on one hand, and law and public administration, on the other, are linked to the quality of regional investment climate and other measures of institutional quality in a manner predicted by our theory. This confirms that investments in human capital reflect the quality of institutions, pointing to a mechanism connecting institutions to economic outcomes.

Suggested Citation

  • Michael Alexeev & Timur Natkhov & Leonid Polishchuk, 2019. "Institutions and the Allocation of Talent: Evidence from Russian Regions," CAEPR Working Papers 2019-003, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    • Handle: RePEc:inu:caeprp:2019003
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    File URL: https://caepr.indiana.edu/RePEc/inu/caeprp/caepr2019-003.pdf
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    Cited by:

    1. Alexeev, Michael & Chernyavskiy, Andrey, 2021. "The impact of institutional quality on manufacturing sectors: A panel data analysis," Economic Systems, Elsevier, vol. 45(3).

    More about this item

    Keywords

    institutions; allocation of talent; rent-seeking; human capital;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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