Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2017-12-08
Number: 17-116/VII
Author-Name: Thomas (T.L.P.R.) Peeters
Author-Email: peeters@ese.eur.nl
Author-Workplace-Name: Erasmus School of Economics, ERIM; Tinbergen Institute, The Netherlands
Author-Name: Stefan Szymanski
Author-Email: stefansz@umich.edu
Author-Workplace-Name: University of Michigan
Author-Name: Marko Terviö
Author-Email: marko.tervio@aalto.fi
Author-Workplace-Name: Aalto University
Title: The inefficient advantage of experience in the market for football managers
Abstract: We study hiring in a labor market where worker ability can only be observed on-the-job, but quickly becomes public information after labor market entry. We show that firms in these markets have a socially inefficient incentive to hire low talented, experienced workers instead of more promising labor market entrants, either when an extremely poor hire may bankrupt the firm, or when workers cannot commit to long-term contracts. In a dataset covering 38 years of hiring in the English labor market for football managers, we find that in around one quarter of all cases, where a firm hires an experienced worker, this experienced worker has an estimated ability below the average ability of recent labor market entrants. We argue this hiring behavior is inefficient, because it has persistently depressed the average ability of the active manager labor force over our sample period.
Classification-JEL: M51, J63, J24, Z22
Keywords: hiring, labor market entrants, worker ability, European football
File-Url: https://papers.tinbergen.nl/17116.pdf
File-Format: application/pdf
File-Size: 535840 bytes
Handle: RePEc:tin:wpaper:20170116