What Can International Cricket Teach Us About the Role of Luck in Labor Markets?

Author/Editor:

Shekhar Aiyar ; Rodney Ramcharan

Publication Date:

October 1, 2010

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

How important is luck in determining labor market outcomes? We address this question using a new dataset of all international test cricketers who debuted between 1950 and 1985. We present evidence that a player’s debut performance is strongly affected by an exogenous source of variation: whether the debut series is played at home or abroad. This allows us to identify the role of luck - factors unrelated to ability - in shaping future career outcomes. We find that players lucky enough to debut at home perform significantly better on debut. Moreover, debut performance has a large and persistent impact on long run career outcomes. We also make headway in empirically distinguishing between competing explanations for why exogenous initial conditions exercise a persistent impact on career performance

Series:

Working Paper No. 10/225

Subject:

English

Publication Date:

October 1, 2010

ISBN/ISSN:

9781455208906/1018-5941

Stock No:

WPIEA2010225

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

29

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