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

30 Pages Posted: 1 Feb 2011

See all articles by Shekhar S. Aiyar

Shekhar S. Aiyar

International Monetary Fund (IMF)

Rodney Ramcharan

University of Southern California, Marshall School of Business

Date Written: October 2010

Abstract

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

Keywords: Cross country analysis, Global competitiveness, Labor markets

Suggested Citation

Aiyar, Shekhar S. and Ramcharan, Rodney, What Can International Cricket Teach Us About the Role of Luck in Labor Markets? (October 2010). IMF Working Papers, Vol. , pp. 1-29, 2010. Available at SSRN: https://ssrn.com/abstract=1750713

Shekhar S. Aiyar

International Monetary Fund (IMF) ( email )

700 19th Street NW - HQ 5-403
Washington, DC 20431
United States
202-623-8638 (Phone)

Rodney Ramcharan (Contact Author)

University of Southern California, Marshall School of Business ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States

HOME PAGE: http://https://sites.google.com/site/rodneyramcharan/

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