A Lucky Start

• Author: Shekhar Aiyar/Rodney Ramcharan
• Position: Senior Economist in the IMF’s Asia and Pacific Department/Senior Economist in the IMF’s African Department

IS landing a good first job a matter of luck or ability? Is the playing field level between somebody who graduates in a boom and somebody who graduates in a recession? And how long-lasting is the impact of a good first job on a person’s career? These questions are central to societal notions of fairness. If, for example, software mogul Bill Gates’s wealth were solely a matter of luck, then there would be little harm in redistributing it to the less fortunate. But if successful careers reflect only hard work and ability, then high levels of taxation would be both unfair and inefficient.

The labor literature has found that obtaining a good first job yields many long-term career benefits, such as higher lifetime pay and status. If people were assigned first jobs randomly, this would imply a large role for luck in determining long-term career outcomes. But people are not assigned first jobs randomly. Those perceived to have high ability are likely to receive good initial job placements, and, to the extent that these perceptions are correct, are also likely to have successful careers. Because intrinsic ability is hard for the economist to observe, identifying the extent to which luck matters in labor markets is difficult.

Sports, and in particular, international test cricket-a contest between two national teams that stretches over five days-provides an ideal, if novel, context in which to study the relative importance of luck in career outcomes. Performance is observable and easily measured. The stakes are high, positions in national teams scarce, and success yields large payoffs. Moreover, in the case of test cricket, performance depends not only on ability, but also on familiarity with local geographic and atmospheric conditions, which vary widely and systematically across the nations that play test matches. We used data on all test cricketers who debuted between 1950 and 1985 to isolate intrinsic ability from luck for those playing their first test series. We did so by examining information on whether the debut series was played at home or abroad-which is unlikely to be influenced by the debutant and is largely a matter of luck.

Home sweet home

We find that playing at home has a large and significant beneficial impact on a cricketer’s performance in his debut test series and that his first-series...