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Abstract

This paper analyzes a model of economic development which is propagated by matching between technologies and the talents they require. Differences in productivity across countries are amplified by three dimensions of talent utilization. First, the range of different talents utilized. Second, the density of a specific talent utilized. Third, the average match quality in the economy. In our setup, the equilibrium variety of technologies increases with productivity. A larger number of technologies enables higher match quality between individuals’ talents and requirements of technologies and thus increases the returns to search. More intensive search further contributes to talent utilization.

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