Productivity and Selection of Human Capital with Machine Learning
American Economic Review
vol. 106,
no. 5, May 2016
(pp. 124-27)
Abstract
Economists have become increasingly interested in studying the nature of production functions in social policy applications, with the goal of improving productivity. Traditionally models have assumed workers are homogenous inputs. However, in practice, substantial variability in productivity means the marginal productivity of labor depends substantially on which new workers are hired--which requires not an estimate of a causal effect, but rather a prediction. We demonstrate that there can be large social welfare gains from using machine learning tools to predict worker productivity, using data from two important applications - police hiring and teacher tenure decisions.Citation
Chalfin, Aaron, Oren Danieli, Andrew Hillis, Zubin Jelveh, Michael Luca, Jens Ludwig, and Sendhil Mullainathan. 2016. "Productivity and Selection of Human Capital with Machine Learning." American Economic Review, 106 (5): 124-27. DOI: 10.1257/aer.p20161029Additional Materials
JEL Classification
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- I11 Analysis of Health Care Markets
- H75 State and Local Government: Health; Education; Welfare; Public Pensions
- H76 State and Local Government: Other Expenditure Categories
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J45 Public Sector Labor Markets