Or more generally, does your initial job placement matter for your long-term success?  Or does “bad luck” on the job market eventually wash out?  A 2006 paper from Paul Oyer looks at this question.

In this paper, I show that initial career placement matters a great deal in determining the careers of economists. Each place higher in rank of initial insti-tution causes an economist to work at an institution ranked 0.6 places higher in the time period from three to 15 years later. Also, the fact that an economist originally gets a job at a top-50 institution makes that economist 60 percent more likely to work at a top-50 school later in his or her career. While it would obviously come as no surprise to find that economists at higher-ranked schools have higher research output, I will present evidence that for a given economist—that is, holding innate ability constant— obtaining an initial placement at a higher-ranked institution leads to greater professional productivity.

He circumvents the obvious endogeneity issue:  there may be some measure of your quality that can’t be observed in the data and then lower initial placement is going to be correlated with lower intrinsic quality.  The way he gets around this is to compare cohorts in strong-market years with cohorts from weaker years.  Suppose that the business cycle is uncorrelated with your intrinsic skill and bad times means worse than usual placement.  Then the same quality worker will have worse placement in weak-market years.

In fact, Oyer finds that students who enter the market in weak years are less successful even in the long run.  This is evidence that their initial placement mattered.

There remain some selection problems, however.  For example, students have choice over which year to enter the market.  It could be that, anticipating the worse placements, the best students enter the market a year before a downturn or wait a year after.  Also, in bad years the best students might find altogether better alternatives than academia and go to the private sector.

Here’s my idea for a different instrument:  couples.  It often happens that a student on the market has a spouse who is seeking a job in the private sector.  Finding a good job in the same city for both partners is more constraining than a solo search and typically the student will have to compromise, taking their seond- or third-best offer.

If being married at the time of entering the market is uncorrelated with your unobservable talent as an economist, then a difference in the long-run success of PhDs with dual searches would be evidence of the effect of initial placement.

(I would focus on academic-private sector couples.  In an academic-academic couple, the two quite often market themselves as a bundle to the same institution and the worse of the two gets a better placement than he would if he were solo.  But it would be interesting to compare academic-academics to academic-private.)

(Casquette cast:  Seema Jayachandran)