Working Paper: CEPR ID: DP13979
Authors: Tobias Bruenner; Guido Friebel; Richard Holden; Suraj Prasad
Abstract: We study an agent’s incentives to discover where her talents lie before putting them to productive use. In our setting, an agent can specialize and learn about the same type of talent repeatedly, or experiment and learn about different types of talent. When talents are normally and symmetrically distributed we find that experimentation is efficient, regardless of one’s initial draw of talent. Competitive labor markets encourage experimentation whereas monopsonistic labor markets induce specialization. Relaxing our assumptions of normality and symmetry in the distribution of talents, and allowing for human capital acquisition, provides a role for specialization in discovering talents.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor market competition (J29) | Agents' incentives to experiment (D82) |
| Competitive labor markets (J49) | Efficient experimentation in talent discovery (C91) |
| Monopsonistic labor markets (J42) | Suppression of experimentation (C90) |
| Monopsonistic labor markets (J42) | Specialization in a sector (L52) |
| Human capital acquisition (J24) | Optimal specialization under certain conditions (C61) |
| Distribution of talents being symmetric and normal (C46) | Efficiency of experimentation (C90) |