encourage advances in within-firm productivity growth. Improvements to the quality of education at all levels and increasing the …

The purpose of this paper is to study how education shapes the allocation of talent. To model the link between … education and the allocation of talent, we add two features to a Spence (1974) type of two-sector education model. First …, performance contracts give a worker incentives to choose the sector where (she believes she is) most productive. Second, education …