Misallocation of talent and human capital: Political economy analysis

Mark Gradstein

doi:10.1016/j.euroecorev.2019.05.010

Misallocation of talent and human capital: Political economy analysis

Mark Gradstein

Department of Economics

Ben-Gurion University of the Negev

Research output: Contribution to journal › Article › peer-review

Abstract

Mismatches in the labor market, specifically because of underrepresentation of various population groups, carry significant economic cost. In this paper we argue, using a simple analytical model that an additional cost component is related to the effect of such underrepresentation on incentives to invest in human capital, which results in a mutual feedback relationship between the labor market and the skill acquisition market and may lead to economy's divergence. Further, it is shown that an initially advantaged group may have an incentive to minimize the bias against the disadvantaged group, and that political enfranchisement is the means to achieve a commitment to such a policy.

Original language	American English
Pages (from-to)	148-157
Number of pages	10
Journal	European Economic Review
Volume	118
DOIs	https://doi.org/10.1016/j.euroecorev.2019.05.010
State	Published - 1 Sep 2019

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 4 Quality Education
SDG 8 Decent Work and Economic Growth

Keywords

Group bias
Human capital
Political enfranchisement
Talent mismatch

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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10.1016/j.euroecorev.2019.05.010

Cite this

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abstract = "Mismatches in the labor market, specifically because of underrepresentation of various population groups, carry significant economic cost. In this paper we argue, using a simple analytical model that an additional cost component is related to the effect of such underrepresentation on incentives to invest in human capital, which results in a mutual feedback relationship between the labor market and the skill acquisition market and may lead to economy's divergence. Further, it is shown that an initially advantaged group may have an incentive to minimize the bias against the disadvantaged group, and that political enfranchisement is the means to achieve a commitment to such a policy.",

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AB - Mismatches in the labor market, specifically because of underrepresentation of various population groups, carry significant economic cost. In this paper we argue, using a simple analytical model that an additional cost component is related to the effect of such underrepresentation on incentives to invest in human capital, which results in a mutual feedback relationship between the labor market and the skill acquisition market and may lead to economy's divergence. Further, it is shown that an initially advantaged group may have an incentive to minimize the bias against the disadvantaged group, and that political enfranchisement is the means to achieve a commitment to such a policy.

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JO - European Economic Review

JF - European Economic Review

ER -

Misallocation of talent and human capital: Political economy analysis

Abstract

UN SDGs

Keywords

All Science Journal Classification (ASJC) codes

Access to Document

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