134 Institutions, Competitiveness and Cognitive Ability
- Syngjoo Choi, Byung-Yeon Kim, Jungmin Lee, Sokbae Lee
- sier_134.pdf
Abstract
We investigate whether growing up in a socialist country affects the development
of competitiveness by comparing three Korean groups in South Korea, born and raised
in three countries with distinct institutional environments: South Korea, North Korea,
and China. We examine the effect of home country experiences on competitiveness using
laboratory experiments. Results show that North Korean refugees are significantly
less competitive than South Koreans or Korean-Chinese immigrants. Ultimately, we
find that the lower cognitive ability of North Koreans is a crucial determinant for the
deficiency of competitiveness, while we fail to find evidence for direct effects of socialist
institutions. Analysis through the lens of a choice model with probability weighting
uncovers the effects of cognitive ability not only on expected performance but also on
subject belief about winning and aversion for competition.
Keywords: Piece Rate; Tournament; North Korea; Institution; Laboratory Experiment
JEL classification: C92; P20