The Allocation of Talent: Implications for Growth

  title={The Allocation of Talent: Implications for Growth},
  author={Kevin M. Murphy and Andrei Shleifer and Robert W. Vishny},
  journal={Entrepreneurship \& Economics eJournal},
A country's most talented people typically organize production by others, so they can spread their ability advantage over a larger scale. When they start firms, they innovate and foster growth, but when they become rent seekers, they only redistribute wealth and reduce growth. Occupational choice depends on returns to ability and to scale in each sector, on market size, and on compensation contracts. In most countries, rent seeking rewards talent more than entrepreneurship does, leading to… Expand
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