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

41 Pages Posted: 6 Apr 2021

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: April 4, 2021


How resilient are high-skilled, white collar workers? We exploit a uniquely comprehensive dataset of individual-level resumes of bank employees and the setting of the Lehman Brothers bankruptcy to estimate the effect of an unanticipated shock on the career paths of mobile and high skilled labor. We find evidence of short-term effects that largely dissipate over the course of the decade and that touch only the senior-most employees. We match each employee of Lehman Brothers in January 2008 to the most similar employees at Goldman Sachs, Morgan Stanley, Deutsche Bank, and UBS based on job positions, skills, education, and demographics. By 2019, the former Lehman Brothers employees are 2% more likely to have experienced at least a six-months-long break from reported employment and 3% more likely to have left the financial services industry. However, these effects concentrate among the senior individuals such as vice presidents and managing directors and are absent for junior employees such as analysts and associates. Furthermore, in terms of subsequent career growth, junior employees of Lehman Brothers fare no worse than their counterparts at the other banks. Analysts and associates employed at Lehman Brothers in January 2008 have equal or greater likelihoods of achieving senior roles such as managing director in existing enterprises by January 2019 and are more likely to found their own businesses.

Keywords: career disruptions, bankruptcy, 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%? (April 4, 2021). 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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