Lehman's Lemons: Do Career Disruptions Matter for the Top 5%?

63 Pages Posted: 6 Apr 2021 Last revised: 11 Apr 2024

See all articles by Anastassia Fedyk

Anastassia Fedyk

University of California, Berkeley - Haas School of Business

James Hodson

AI for Good; Cognism; Jožef Stefan Institute

Date Written: August 9, 2024


How resilient are high-skilled, white-collar workers? We address this question by exploiting a uniquely comprehensive dataset of individual-level resumes of bank employees and the setting of the Lehman Brothers bankruptcy. The results reveal that the disruption had no effect on long-term career trajectories, except for senior employees. By 2019, former Lehman Brothers employees were 2% more likely to have experienced a break from employment and 2.5% more likely to have left the financial services industry than employees at other multinational investment banks---but these effects are driven exclusively by senior individuals, such as managing directors, and routine workers, such as secretaries. Analysts and associates experienced no adverse effects. Furthermore, in terms of subsequent career growth, analysts and associates from Lehman Brothers fared no worse than their counterparts at non-disrupted banks in terms of both (i) achieving high-ranking positions and (ii) the compensation of these subsequent positions. These results contrast with the extensive evidence of large, persistent negative effects of displacement on blue-collar workers, highlighting a novel aspect of income-related inequality.

Keywords: career disruption, bankruptcy, financial distress, human capital, skilled labor, inequality

JEL Classification: J24, J63, G01, G21

Suggested Citation

Fedyk, Anastassia and Hodson, James, Lehman's Lemons: Do Career Disruptions Matter for the Top 5%? (August 9, 2024). Available at SSRN: https://ssrn.com/abstract=3819317 or http://dx.doi.org/10.2139/ssrn.3819317

Anastassia Fedyk (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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2220 Piedmont Avenue
Berkeley, CA 94720
United States

James Hodson

AI for Good ( email )

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HOME PAGE: http://ai4good.org

Cognism ( email )

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HOME PAGE: http://cognism.com

Jožef Stefan Institute ( email )

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HOME PAGE: http://ailab.ijs.si

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