Risk and the allocation of talent in the Roy model

German Cubas; Pedro Silos; Vesa-Heikki Soini

doi:10.1016/j.econlet.2024.111623

Risk and the allocation of talent in the Roy model

German Cubas^*
, Pedro Silos
, Vesa-Heikki Soini

^*Corresponding author for this work

Economics, Helsinki

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

Abstract

With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

Original language	English
Article number	111623
Peer-reviewed scientific journal	Economics Letters
Volume	236
ISSN	0165-1765
DOIs	https://doi.org/10.1016/j.econlet.2024.111623
Publication status	Published - 04.03.2024
MoE publication type	A1 Journal article - refereed

Keywords

511 Economics
Incomplete markets
Misallocation
Occupations
Risk
Roy model

Access to Document

10.1016/j.econlet.2024.111623

OpenUrl availability

Full text

Cite this

@article{94bb57a5be2749d6b081172ee91a0749,

title = "Risk and the allocation of talent in the Roy model",

abstract = "With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.",

keywords = "511 Economics, Incomplete markets, Misallocation, Occupations, Risk, Roy model",

author = "German Cubas and Pedro Silos and Vesa-Heikki Soini",

note = "Funding Information: We thank the editor and an anonymous referee. We also thank participants of different conferences and venues where the paper was presented and specially, Dante Amengual, Juan Dubra, Max Dvorkin, Steve Craig, Kevin Donovan, Andres Erosa, Rafael Guntin, Chris Herrington, Erik Hurst, Joe Kaboski, Alexander Ludwig, Bent Sorensen, and Felix Wellschmied for their detailed and insightful comments. Publisher Copyright: {\textcopyright} 2024 Elsevier B.V. Publisher Copyright: {\textcopyright} 2024 Elsevier B.V.",

year = "2024",

month = mar,

day = "4",

doi = "10.1016/j.econlet.2024.111623",

language = "English",

volume = "236",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier BV",

}

TY - JOUR

T1 - Risk and the allocation of talent in the Roy model

AU - Cubas, German

AU - Silos, Pedro

AU - Soini, Vesa-Heikki

N1 - Funding Information: We thank the editor and an anonymous referee. We also thank participants of different conferences and venues where the paper was presented and specially, Dante Amengual, Juan Dubra, Max Dvorkin, Steve Craig, Kevin Donovan, Andres Erosa, Rafael Guntin, Chris Herrington, Erik Hurst, Joe Kaboski, Alexander Ludwig, Bent Sorensen, and Felix Wellschmied for their detailed and insightful comments. Publisher Copyright: © 2024 Elsevier B.V. Publisher Copyright: © 2024 Elsevier B.V.

PY - 2024/3/4

Y1 - 2024/3/4

N2 - With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

AB - With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

KW - 511 Economics

KW - Incomplete markets

KW - Misallocation

KW - Occupations

KW - Risk

KW - Roy model

UR - https://www.scopus.com/pages/publications/85186730492

U2 - 10.1016/j.econlet.2024.111623

DO - 10.1016/j.econlet.2024.111623

M3 - Article

SN - 0165-1765

VL - 236

JO - Economics Letters

JF - Economics Letters

M1 - 111623

ER -

Risk and the allocation of talent in the Roy model

Abstract

Keywords

Access to Document

OpenUrl availability

Other files and links

Fingerprint

Cite this