Online Appendix to “ The Allocation of Talent and U . S . Economic Growth ” ( Not for publication )

Proof of Proposition 1. Occupational Choice As given in equation (5), the individual’s utility from choosing a particular occupation, U(τi, wi, ǫi), is proportional to (w̄igǫi) β 1−η , where w̄ig ≡ wih̄igs φi i (1− si) 1−η β /τig. The solution to the individual’s problem, then, involves picking the occupation with the largest value of w̄igǫi. To keep the notation simple, we will suppress the g subscript in what follows. Without loss of generality, consider the probability that the individual chooses occupation 1, and denote this by p1. Then p1 = Pr [w̄1ǫ1 > w̄sǫs] ∀s 6= 1 = Pr [ǫs < w̄1ǫ1/w̄s] ∀s 6= 1 = ∫