Career Lotto: Labor Supply in Winner-Take-All Markets
Wayne A. Grove (),
Michael Jetter () and
Kerry Papps ()
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Wayne A. Grove: Le Moyne College
No 12012, IZA Discussion Papers from Institute for the Study of Labor (IZA)
Are people prone to selecting occupations with highly skewed income distributions despite minuscule chances of success? Assembling a comprehensive pool of potential teenage entrants into professional tennis (a typical winner-take-all market), we construct objective measures of relative ability and earnings projections. We find that prospective tennis professionals are attracted to right-skewed earnings distributions, independent of mean and variance. If skewness in prize money fell to zero, males would be 23% and females 5% less likely to continue pursuing a professional career, on average. Thus, winner-take-all labor markets appear to systematically encourage those with modest talents to pursue long-shot careers.
Keywords: winner-take-all markets; superstar markets; labor supply; human capital; gender differences; skewness preferences (search for similar items in EconPapers)
JEL-codes: J22 J24 J31 J44 L83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma and nep-spo
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