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The inefficient advantage of experience in the market for football managers

Author

Listed:
  • Thomas (T.L.P.R.) Peeters

    () (Erasmus School of Economics, ERIM; Tinbergen Institute, The Netherlands)

  • Stefan Szymanski

    () (University of Michigan)

  • Marko Terviö

    () (Aalto University)

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.

Suggested Citation

  • Thomas (T.L.P.R.) Peeters & Stefan Szymanski & Marko Terviö, 2017. "The inefficient advantage of experience in the market for football managers," Tinbergen Institute Discussion Papers 17-116/VII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20170116
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    File URL: https://papers.tinbergen.nl/17116.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    hiring; labor market entrants; worker ability; European football;

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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