Career Lotto: Labor supply in winner-take-all markets

Wayne Grove, Michael Jetter, Kerry L. Papps

Research output: Working paperDiscussion paper

Abstract

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.
Original languageEnglish
PublisherIZA Institute for the Study of Labor
Pages1-40
Publication statusPublished - Dec 2018

Publication series

NameIZA Discussion Paper Series
PublisherIZA Institute of Labor Economics
No.12012
ISSN (Electronic)2365-9793

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