The Allocation of Talent: Evidence from the Market of Economists

Boehm, Michael J. and Watzinger, Martin (2010): The Allocation of Talent: Evidence from the Market of Economists.

Abstract

Recent research in labor economics has highlighted the substantial and long-lasting adverse effect of recessions on employment prospects and earnings. In this paper, we study whether individuals react to these shocks by changing career paths and thereby affect the selection of talent into sectors. More concretely, we examine how the publication success and career choice of graduates from the leading US economics PhD programs varies with the state of the business cycle at application and at graduation. Our results strongly support the predictions of a Roy-style model of self-selection into sectors: We find that adverse macroeconomic conditions at application lead to a substantially more productive selection of individuals into academia and at graduation they lead to more PhDs deciding to stay in academia.

• Item Type: MPRA Paper
• Language: English
• Keywords: Sectoral Selection, Skill Composition, Business Cycle, Careers
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I29 - Other; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J44 - Professional Labor Markets ; Occupational Licensing; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity

References

Fougere, D., and J. Pouget (2003): “Who Wants to Be a SFonctionnaireŠ? The Effects of Individual Wage Differentials and Unemployment Probabilities on the Queues for Public Sector Jobs,” Mimeo.

Freeman, R. B., and J. van Reenen (2009): “What if Congress Doubled R&D Spending on the Physical Sciences?,” Mimeo.

Gallet, C. A., J. A. List, and P. F. Orazem (2005): “Cyclicality and the Labor Market for Economists,” Southern Economic Journal, 72(2), 284–304.

Goolsbee, A. (1998): “Does Government R&D Policy Mainly Benefit Scientists and Engineers?,” The American Economic Review, 88(2), 298–302.

Hansen, W. L. (1991): “The Education and Training of Economics Doctorates: Major Findings of the Executive Secretary of the American Economic Association’s Commission on Graduate Education in Economics,” Journal of Economic Literature, 29(3), 1054–1087.

Heckman, J. J. (1976): “The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models,” pp. 120–137.

Kalaitzidakis, P., T. P. Mamuneas, and T. Stengos (2003): “Rankings of Academic Journals and Institutions in Economics,” Journal of the European Economic Association, 1(6), 1346–1366.

Angrist, J. D., and J.-S. Pischke (2008): Mostly Harmless Econometrics: An Empiricist’s Companion. Princeton University Press. Azoulay, P., J. S. G. Zivin, and J. Wang (2008): “Superstar Extinction,” Mimeo.

Bedard, K., and D. A. Herman (2008): “Who goes to graduate/professional school? The importance of economic fluctuations, undergraduate field, and ability,” Economics of Education Review, 27(2), 197–210.

Ellison, G. (2002a): “Evolving Standards for Academic Publishing: A q-r Theory,” Journal of Political Economy, 110(5), 994–1034.

(2002b): “The Slowdown of the Economics Publishing Process,” Journal of Political Economy, 110(5), 947–993.

(2007): “Is Peer Review in Decline?,” NBER working paper.

Kim, E. H., A. Morse, and L. Zingales (2006): “What Has Mattered to Economics since 1970,” The Journal of Economic Perspectives, 20(4), 189–202.

(2009): “Are elite universities losing their competitive edge?,” Journal of Financial Economics, 93(3), 353 – 381.

Laband, D. N., and M. J. Piette (1994): “The Relative Impacts of Economics Journals: 1970-1990,” Journal of Economic Literature, 32(2), 640–666.

Oreopoulos, P., T. v. Wachter, and A. Heisz (2008): “The Short- and Long- Term Career Effects of Graduating in a Recession: Hysteresis and Heterogeneity in the Market for College Graduates,” Mimeo.

Oyer, P. (2006): “Initial Labor Market Conditions and Long-Term Outcomes for Economists,” Journal of Economic Perspectives, 20(3), 143-160.

(2008): “The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Income,” The Journal of Finance, 63(6), 2601–2628.

Philippon, T., and A. Reshef (2009): “Wages and Human Capital in the U.S. Financial Industry: 1909-2006,” (14644).

ROY, A. D. (1951): “Some Thoughts on the Distribution of Earnings,” Oxford Economic Papers, 3(2), 135–146.

Schmieder, J. F., T. von Wachter, and S. Bender (2009): “The Long-Term Impact of Job Displacement in Germany During the 1982 Recession on Earnings, Income, and Employment,” Mimeo.

Stock, W. A., and J. J. Siegfried (2006): “Time-to-Degree for the Economics Ph.D. Class of 2001-2002,” The American Economic Review, 96(2), 467–474.

Sullivan, D., and T. von Wachter (2009): “Job Displacement and Mortality: An Analysis Using Administrative Data,” The Quarterly Journal of Economics, 124(3), 1265–1306.

von Wachter, T., J. Song, and J. Manchester (2008): “Long-Term Earnings Losses due to Job Separation During the 1982 Recession: An Analysis Using Longitudinal Administrative Data from 1974 to 2004,” Mimeo.

Waldinger, F. (2009): “Peer Effects in Science - Evidence from the Dismissal of Scientists in Nazi Germany,” Mimeo.