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Firm choice and career success - theory and evidence

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  • Deutscher, Christian
  • Gürtler, Marc
  • Gürtler, Oliver
  • DeVaro, Jed

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.

Suggested Citation

  • Deutscher, Christian & Gürtler, Marc & Gürtler, Oliver & DeVaro, Jed, 2020. "Firm choice and career success - theory and evidence," European Economic Review, Elsevier, vol. 127(C).
    • Handle: RePEc:eee:eecrev:v:127:y:2020:i:c:s0014292120301021
    DOI: 10.1016/j.euroecorev.2020.103470
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    Cited by:

    1. Bar-Eli, Michael & Krumer, Alex & Morgulev, Elia, 2020. "Ask not what economics can do for sports - Ask what sports can do for economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 89(C).
    2. Ruo SHANGGUAN & Jed DEVARO & Hideo OWAN, 2021. "Enhancing Team Productivity through Shorter Working Hours: Evidence from the Great Recession," Discussion papers 21040, Research Institute of Economy, Trade and Industry (RIETI).
    3. Roberto Pico-Saltos & David Sabando-Vera & Marcela Yonfa-Medranda & Javier Garzás & Andrés Redchuk, 2022. "Hierarchical Component Model (HCM) of Career Success and the Moderating Effect of Gender, from the Perspective of University Alumni: Multigroup Analysis and Empirical Evidence from Quevedo, Ecuador," Sustainability, MDPI, vol. 15(1), pages 1-25, December.
    4. Gabriel Burdin & Jose Garcia-Louzao, 2025. "Employee-Owned Firms and the Careers of Young Workers," CESifo Working Paper Series 11632, CESifo.

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    More about this item

    Keywords

    Firm choice; Big and small pond; Career; Self-selection; Signaling; Learning;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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