Getting Lucky on My Way to the Top
The market for economists was in a slump when I graduated. I was fortunate to earn a visitor’s position at the University of Virginia and then a tenure-track position at Ball State University in Muncie, Indiana, but I had few alternative offers. My colleagues in Muncie were good but after a few years I was unhappy enough with the university and the town to take a flying leap to become director of research at the Independent Institute in Oakland, CA. At the time, I thought this was the end of my academic career.
David Theroux at the Independent Institute encouraged my academic work, however, seeing it as consistent with the Institute’s focus on research, and I kept publishing. Events (and especially Tyler!) then conspired to bring me to GMU for which I am very grateful.
All this is by way of introducing Austan Goolsbee’s latest column in the NYTimes. Goolsbee discusses two new papers which demonstrate that economic conditions in the year in which you graduate can have a surprisingly long-lasting effect on career earnings.
The Stanford class of 1988, for example, entered the job market just
after the market crash of 1987. Banks were not hiring, and so average
wages for that class were lower than for the class of 1987 or for later
classes that came out after the market recovered. Even a decade or more
later, the class of 1988 was still earning significantly less. They
missed the plum jobs right out of the gate and never recovered….
These data confirm that people essentially cannot close the wage gap by
working their way up the company hierarchy. While they may work their
way up, the people who started above them do, too. They don’t catch up.
The recession graduates who actually do catch up tend to be the ones
who forget about rising up the ladder and, instead, jump ship to other
I take three points from my career and this research. Leaving the academy turned out to be the just the thing to set me apart from the pack. It didn’t have to work out that way but when your mean is low you need to throw some variance into the mix. Finance theorists will recognize this lesson from options pricing theory.
Second, I moved across the continent twice – from Fairfax, to Charlottesville, to Muncie, to Oakland and then back to Fairfax – sometimes with my wife and sometimes not – all in the space of about 10 years. After moving so often, when I browsed book stores my decision to buy was based more on the weight of the book than on the price. Jumping ship repeatedly, however, did help me to recover from a difficult beginning.
Third, luck matters.
Addendum: Now Open to Comments.