Does expanding the research workforce explain falling research productivity?
Core argument: The authors show the share of the labor force employed in research has risen 3-fold since the 1960s, an expansion they argue could not occur without lowering researchers' average ability if workers sort into sectors by ability.
We argue that a substantial portion of the declining productivity of research is the product of a transitional composition effect instead of a permanent phenomenon. We show that the share of the labor force employed in research has increased 3-fold since the 1960s. If workers are sorted into sectors according to ability, this rapid expansion cannot have been achieved without changing the average ability among researchers. If research is positively selected on ability, i.e., workers with a comparative advantage in research also tend to have an absolute advantage in research, the direction of this change is unambiguously negative. This source of diminishing returns is transitional because it is expected to fade away when the share of workers employed in research ceases to rise. Our results suggest that the average ability of researchers has fallen substantially. We find that separating transitional diminishing returns from permanent ones nearly doubles the long-run growth rate of per capita income predicted by a broad class of growth models.




