The Inefficient Advantage of Experience in the Market for Football Managers

Tinbergen Institute Discussion Paper 2017-116/VII

52 Pages Posted: 12 Dec 2017

See all articles by Thomas Peeters

Thomas Peeters

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); University of Antwerp - Department of Economics

Stefan Szymanski

University of Michigan at Ann Arbor

Marko Terviö

Aalto University

Date Written: December 8, 2017

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.

Keywords: hiring, labor market entrants, worker ability, European football

JEL Classification: M51, J63, J24, Z22

Suggested Citation

Peeters, Thomas and Szymanski, Stefan and Terviö, Marko, The Inefficient Advantage of Experience in the Market for Football Managers (December 8, 2017). Tinbergen Institute Discussion Paper 2017-116/VII. Available at SSRN: https://ssrn.com/abstract=3084635 or http://dx.doi.org/10.2139/ssrn.3084635

Thomas Peeters (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

Stefan Szymanski

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Marko Terviö

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101
Finland

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