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Fernando A Barros Jr and Bruno R Delalilbera
 
''Market frictions, misallocation of talent and development''
( 2018, Vol. 38 No.4 )
 
 
We identify a negative relationship between teachers' wage and regional income in the Brazilian data. To explain this fact, we propose a general equilibrium model where workers' decision are distorted due to market frictions and teachers' quality is calculated endogenously as an input for the formation of human capital. Our model is calibrated to Brazilian scenario, matching data and closely reproducing share of workers and the average wage for each state and occupation. Our benchmark economy suggests that there is a misallocation of workers in the Brazilian economy and a reallocation of high skilled workers to teachers' occupation could increase GDP due to a multiplicative effect of teachers' human capital. We also find that the outside options to teachers' career in less developed states are worst than in richer states. This contributes to higher talented workers to choose the teacher's career in poorer states.
 
 
Keywords: Labor Misallocation, Human Capital, Occupation Choice
JEL: O4 - Economic Growth and Aggregate Productivity: General
J2 - Demand and Supply of Labor: General
 
Manuscript Received : Jul 18 2017 Manuscript Accepted : Dec 13 2018

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