ARE WINNERS PROMOTED TOO OFTEN? EVIDENCE FROM THE NFL DRAFT 1999–2012
Economic Inquiry, 2015, vol. 53, issue 2, 1317-1330
type="main" xml:id="ecin12165-abs-0001"> Firms engaging in hiring face recruitment costs. To reduce these costs, firms concentrate their efforts in locations that are perceived as talent rich or have produced successful employees in the past. Such recruitment mechanisms may lead to statistical discrimination if they reduce uncertainty for a subset of candidates or if firms relate current employee attributes with the institution. In this article, I test for statistical discrimination associated with an individual's institutional affiliation that results from targeted hiring practices by using a unique individual-level data set of National Football League (NFL) draft prospects. I find that conditional on individual ability, individuals from highly ranked college teams are drafted earlier than individuals from lower ranked institutions. Over the length of a player's professional career, a player's college institution has no effect on career success, indicating that certain players are damaged by this recruitment mechanism. Even though players can suffer substantial financial damages as a result of being drafted later in the draft, NFL team performance is not sufficiently affected for teams to exploit this bias . ( JEL J71, J31)
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