Talent Allocation and Post-Reform Growth in Central America

This paper examines the post-reform economic growth in three Central American economies -- Costa Rica, El Salvador, and Panama. From 1995 to 2015, each economy witnessed phenomenal shifts in labor market participation and occupational distribution...

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Main Author:	Sinha, Rishabh
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	ECONOMIC REFORM LABOR MARKET LABOR FORCE PARTICIPATION FEMALE LABOR FORCE PARTICIPATION HIRING BIAS LABOR MARKET DISCRIMINATION PREFERENCES AND NORMS GENDER HUMAN CAPITAL ACCUMULATION ECONOMIC GROWTH OCCUPATIONAL DISTRIBUTION SOCIAL NORMS RESOURCE ALLOCATION LABOR PRODUCTIVITY
Online Access:	http://documents.worldbank.org/curated/en/249921599070476381/Talent-Allocation-and-Post-Reform-Growth-in-Central-America http://hdl.handle.net/10986/34427

id	okr-10986-34427
recordtype	oai_dc
spelling	okr-10986-344272022-09-20T00:12:17Z Talent Allocation and Post-Reform Growth in Central America Sinha, Rishabh ECONOMIC REFORM LABOR MARKET LABOR FORCE PARTICIPATION FEMALE LABOR FORCE PARTICIPATION HIRING BIAS LABOR MARKET DISCRIMINATION PREFERENCES AND NORMS GENDER HUMAN CAPITAL ACCUMULATION ECONOMIC GROWTH OCCUPATIONAL DISTRIBUTION SOCIAL NORMS RESOURCE ALLOCATION LABOR PRODUCTIVITY This paper examines the post-reform economic growth in three Central American economies -- Costa Rica, El Salvador, and Panama. From 1995 to 2015, each economy witnessed phenomenal shifts in labor market participation and occupational distribution of women. If the innate talent for a job did not change differently across genders, the occupational changes suggest that many talented women in the mid-1990s were in professions that did not conform to their comparative advantage. The paper studies the evolution of the occupational distribution using a model of occupational choice in which three forces create frictions to efficient allocation -- discrimination in labor markets, obstacles to human capital accumulation, and preferences (or social norms). The analysis shows that the underlying improvement in talent allocation over the past two decades had a quantitative impact on growth in Costa Rica and Panama. Decomposing the aggregate effects reveals that the gains were driven by declines in obstacles to human capital accumulation. In contrast, shifts in labor market discrimination created headwinds for expansion. The aggregate effects in El Salvador are relatively mild and noisy to the extent that the qualitative effect is difficult to pin down. Nonetheless, the analysis finds that the preference for market work has increased sharply in El Salvador for both genders and has proved to be a drag on growth. 2020-09-03T16:02:13Z 2020-09-03T16:02:13Z 2020-09 Working Paper http://documents.worldbank.org/curated/en/249921599070476381/Talent-Allocation-and-Post-Reform-Growth-in-Central-America http://hdl.handle.net/10986/34427 English Policy Research Working Paper;No. 9380 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Central America Costa Rica El Salvador Panama
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC REFORM LABOR MARKET LABOR FORCE PARTICIPATION FEMALE LABOR FORCE PARTICIPATION HIRING BIAS LABOR MARKET DISCRIMINATION PREFERENCES AND NORMS GENDER HUMAN CAPITAL ACCUMULATION ECONOMIC GROWTH OCCUPATIONAL DISTRIBUTION SOCIAL NORMS RESOURCE ALLOCATION LABOR PRODUCTIVITY
spellingShingle	ECONOMIC REFORM LABOR MARKET LABOR FORCE PARTICIPATION FEMALE LABOR FORCE PARTICIPATION HIRING BIAS LABOR MARKET DISCRIMINATION PREFERENCES AND NORMS GENDER HUMAN CAPITAL ACCUMULATION ECONOMIC GROWTH OCCUPATIONAL DISTRIBUTION SOCIAL NORMS RESOURCE ALLOCATION LABOR PRODUCTIVITY Sinha, Rishabh Talent Allocation and Post-Reform Growth in Central America
geographic_facet	Latin America & Caribbean Central America Costa Rica El Salvador Panama
relation	Policy Research Working Paper;No. 9380
description	This paper examines the post-reform economic growth in three Central American economies -- Costa Rica, El Salvador, and Panama. From 1995 to 2015, each economy witnessed phenomenal shifts in labor market participation and occupational distribution of women. If the innate talent for a job did not change differently across genders, the occupational changes suggest that many talented women in the mid-1990s were in professions that did not conform to their comparative advantage. The paper studies the evolution of the occupational distribution using a model of occupational choice in which three forces create frictions to efficient allocation -- discrimination in labor markets, obstacles to human capital accumulation, and preferences (or social norms). The analysis shows that the underlying improvement in talent allocation over the past two decades had a quantitative impact on growth in Costa Rica and Panama. Decomposing the aggregate effects reveals that the gains were driven by declines in obstacles to human capital accumulation. In contrast, shifts in labor market discrimination created headwinds for expansion. The aggregate effects in El Salvador are relatively mild and noisy to the extent that the qualitative effect is difficult to pin down. Nonetheless, the analysis finds that the preference for market work has increased sharply in El Salvador for both genders and has proved to be a drag on growth.
format	Working Paper
author	Sinha, Rishabh
author_facet	Sinha, Rishabh
author_sort	Sinha, Rishabh
title	Talent Allocation and Post-Reform Growth in Central America
title_short	Talent Allocation and Post-Reform Growth in Central America
title_full	Talent Allocation and Post-Reform Growth in Central America
title_fullStr	Talent Allocation and Post-Reform Growth in Central America
title_full_unstemmed	Talent Allocation and Post-Reform Growth in Central America
title_sort	talent allocation and post-reform growth in central america
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/249921599070476381/Talent-Allocation-and-Post-Reform-Growth-in-Central-America http://hdl.handle.net/10986/34427
_version_	1764480874847404032

Talent Allocation and Post-Reform Growth in Central America

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