Risk and the allocation of talent in the Roy model

German Cubas*, Pedro Silos, Vesa-Heikki Soini

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review


With risk-averse workers and uninsurable earnings shocks, competitive markets allocate too few workers to risky jobs. Using an equilibrium Roy model with incomplete markets, we show that in competitive equilibrium, risky occupations are inefficiently small and hence talent is misallocated.

Original languageEnglish
Article number111623
Peer-reviewed scientific journalEconomics Letters
Publication statusPublished - 04.03.2024
MoE publication typeA1 Journal article - refereed


  • 511 Economics
  • Incomplete markets
  • Misallocation
  • Occupations
  • Risk
  • Roy model


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