Year: 1991
Type: article
Abstract: 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 stagnation. Our evidence shows that countries with a higher proportion of engineering college majors grow faster; whereas countries with a higher proportion of law concentrators grow more slowly.
DOI: 10.2307/2937945
Institutions: University of Chicago, Harvard University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
Funder: National Science Foundation
OpenAlex ID: W2407856457