One Man’s Pain is Another Man’s Gain - Early Career Exposure and Later Labour Market Outcomes

This paper investigates whether early career exposure of unexperienced employees to employers affects their later career outcomes. The extent to which entry-level workers get to demonstrate their abilities is an important determinant of how precisely the employer can estimate their talent. A common difficulty in the literature is finding relevant measures of how often the employer observes an employee. To this end, I use high frequency worker-level data from the National Hockey League, where in-game playing time serves as the measure of exposure. I implement a novel instrumental variable strategy, exploiting co-worker injuries as a source of random variation in junior worker playing time. Co-worker injuries create vacant slots in team rosters, which are usually filled by junior workers, increasing their exposure. Consequently, there is a positive correlation between the number of co-worker injuries that occur and the number of playing opportunities that a junior worker gets during their entry-level career. Using co-worker injuries as an instrument, the results indicate that total entry-level career playing time significantly increases a junior worker’s likelihood of being rehired as well as their post entry-level salary.

Link:

https://drive.google.com/file/d/1KMoKvKqoJtQ125nTOOgZ-jd6DcVxDXsF/view?usp=sharing