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Firm choice and career success - theory and evidence

Christian Deutscher, Marc Gürtler, Oliver Gürtler () and Jed DeVaro

European Economic Review, 2020, vol. 127, issue C

Abstract: We investigate how the decision of workers to join a specific type of firm affects their future career opportunities. Workers can either join a very competitive firm (big pond) or a less competitive one (small pond). In a big pond, it is more difficult to advance, but the potential rewards are higher. We determine a separating equilibrium in which only workers who are confident in their ability join big ponds, implying that the average abilities of new entrants are higher in big ponds than in small ponds. In an empirical analysis with data from professional soccer, we support all the implications from our theoretical model.

Keywords: Firm choice; Big and small pond; Career; Self-selection; Signaling; Learning (search for similar items in EconPapers)
JEL-codes: D82 D83 J62 M51 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:127:y:2020:i:c:s0014292120301021

DOI: 10.1016/j.euroecorev.2020.103470

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European Economic Review is currently edited by T.S. Eicher, A. Imrohoroglu, E. Leeper, J. Oechssler and M. Pesendorfer

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