When Doctors and Lawyers Needed the Right Talent

Third in her class at Stanford Law School, Supreme Court Justice Sandra Day O’Connor had to work as a legal secretary when she graduated. Similarly, being told she should not take a man’s job, Ruth Bader Ginsburg faced employment struggles after graduating at the top of her Columbia law school class.

O’Connor and Ginsburg reflected a larger problem of talent allocation.

Talent Allocation

Focusing on 1960 to 2010, a 2019 paper and recent Project Syndicate article explained how more appropriate talent allocation boosted U.S. economic growth. They looked at three variables. Exploring job choices, they considered hiring discrimination. Recognizing the importance of human capital, they detailed the role of education. Then, as their third component, they evaluated the job choices.

With 1960 their starting point, they first told us that the population of lawyers and doctors changed vastly during the next 50 years. In 1960, 94 percent of all lawyers and doctors were White men. By 2010, with more women and Black men occupying these skilled occupations, the White male presence plunged to 62 percent.

Especially because of changes in human capital, the impact on economic growth was considerable. Diminished talent misallocation was responsible for two-fifths of the increase in per person GDP growth.

Below, you can see where the “frictions”–resistance to women–were greatest. Indeed, the data display what O’Connor and Ginsburg experienced. It was much easier for a woman to become a teacher or secretary than a doctor, lawyer or construction worker:

Our Bottom Line: Comparative Advantage and Production Possibilities Graphs

Comparative Advantage

Nineteenth century economic thinker, David Ricardo would see talent allocation as a comparative advantage issue. The first to see the connection between comparative advantage and well-being, he said we should select the economic activity with the lower opportunity cost. As a result, countries cannot produce everything they do best. Instead, it depends on what they sacrifice. That would mean a nation that is best at making t-shirts and computers would sacrifice too much by doing both. Making t-shirts, they did not produce the computers that were more valuable. The result is trade. When the country with the comparative advantage for t-shirts makes them, then everyone is more productive.

Returning to Sandra Day O’Connor, we know she had the comparative advantage as an attorney. As a legal secretary, her sacrifice–her opportunity cost–was considerable. Similarly, entire nations suffer when they fail to recognize where women and Black men have a comparative advantage. Indeed, when all of us sacrifice the least, we optimize production.

Of course, this all leads us to what our land, labor, and capital can optimally produce.

Production Possibilities Graphs

Using a production possibilities curve, we can depict maximum output for two commodities. However, when a dot is inside the frontier, we are underutilizing our resources:

When a country misallocates its talent, everyone suffers from the impact on economic growth.

My sources and more: Always good for insight, Project Syndicate was today’s beginning. From there, this paper had the substantiating statistics. Then, the World Bank’s Global Gender Distortions Index (GGDI) completed the picture.