Pure-Chance Jobs vs. A Labor Market: The Impact on Careers of a Random Serial Dictatorship for First Job Seekers

American Economic Association Papers and Proceedings, 2021

5 Pages Posted: 9 Mar 2021

See all articles by Ashna Arora

Ashna Arora

Columbia University, Graduate School of Arts and Sciences, Department of Economics; University of Chicago

Leonard Goff

Columbia University, Department of Economics

Jonas Hjort

Columbia Business School - Finance and Economics

Date Written: January 12, 2021

Abstract

Does a worker's first job affect her long-run career? Do any such "first job effects" vary across workers of different types? If so, can policy improve upon a "free" labor market by altering initial matches with employers? We begin to study the impact of market design on the performance of entry-level labor markets, by comparing 20 years when Norway assigned doctors to their first job---residencies---through a Random Serial Dictatorship, with the post-2013 era when the RSD mechanism was replaced with decentralized job-finding. We first estimate the consequences for long-run earnings of different employers for male and female workers. We do so by exploiting RSD-generated random, individual level variation in workers' initial choice set over employers. We then decompose preferences over employers into a component that is due to first job effects and another that is due to the "amenity value" workers of a given type associate with employers of a given type. Finally, we show how realized first job effects, amenity values, and overall worker welfare differ, for each group and in total, in a decentralized labor market compared to a randomized-choice-sets system, by describing how worker-employer matches changed after 2013.

Keywords: first job, random serial dictatorship, amenities, market design, instrumental variables

JEL Classification: J2, J3, D47, C36

Suggested Citation

Arora, Ashna and Goff, Leonard and Hjort, Jonas, Pure-Chance Jobs vs. A Labor Market: The Impact on Careers of a Random Serial Dictatorship for First Job Seekers (January 12, 2021). American Economic Association Papers and Proceedings, 2021, Available at SSRN: https://ssrn.com/abstract=3764995

Ashna Arora

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Leonard Goff (Contact Author)

Columbia University, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States
3012215565 (Phone)

Jonas Hjort

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

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