The Allocation of Talent and U.S. Economic Growth

In 1960, 94 percent of doctorswere whitemen, as were 96 percent of lawyers and 86 percent ofmanagers. By 2008, these numbers had fallen to 63, 61, and 57 percent, respectively. We use a Roy model with occupational frictions to measure the contribution of discrimination faced by blacks and women in the labor market and in the acquisition of human capital to the occupational distribution of these groups from 1960 to 2008. We embed the Roy model in general equilibrium to measure the aggregate effects of the change in these barriers. The reduction in the barriers to occupational choice facing women and blacks can explain 15 to 20 percent of aggregate wage growth, 90 to 95 percent of the wage convergence betweenwomen and blacks and white men, and 30 percent of the rise in women’s labor force participation from 1960 to 2008. ∗We are grateful to participants at several seminars for helpful comments, and to Huiyu Li and Gabriel Ulyssea for excellent research assistance. 2 HSIEH, HURST, JONES, AND KLENOW