Strong institutions attract talent to productive activities, whereas weak ones raise the appeal of redistribution. We find a strong positive cross-country association between the quality of institutions and graduation of university students in science, and an even stronger negative correlation with graduation in law. These findings are robust to various specifications of empirical models. We also demonstrate that institutions dominate other factors affecting the allocation of talent. Finally, we present direct evidence that (mis)allocation of talent between productive and unproductive activities driven by institutional quality explains the discrepancy between private and public returns to education.
The paper investigates the influence of an outside option, i.e. the opportunity to continue one’s career outside the territory currently controlled, on the predatory behavior of the autocrats. Using the data on effectiveness of tax collection and repressiveness of tax jurisprudence in Russian regions in 2007-2009 it demonstrates that regions ruled by governors with larger outside options were characterized, on the one hand, by more repressive behavior of tax authorities, but on the other hand, by smaller additional revenue of the public budget through the tax collection. It conjectures that presence of an outside option induces the ‘roving bandit’ behavior by the autocrats: they use tax auditing to establish control over regional business, but in turn exploit this control to extract private rents rather than revenue for the regional budget used to produce public goods.
The paper examines the role of testosterone-driven aggressive behavior in politics of non-democratic regimes and, in particular, its influence on the extent of the repressiveness of these regimes. To measure testosterone exposure, we apply the facial width-to-height metric (fWHR) – a standard proxy widely used in the psychological literature - and look at a sample of Russian regional governors. We find a positive relationship between the fWHR metric and the level of repression in the region of the governor. Testosterone-related behavior is, however, more widespread among younger governors and among governors with shorter tenure in office. Thus, the paper contributes to the recent trend of integrating insights of behavioral economics into political economics research.