Sources

Date: 2015-10-07; view: 473.

Recessionary genes

Downturns also funnel people into different jobs from those they might otherwise have entered. A 2008 study by Paul Oyer of Stanford University found that Stanford MBAs disproportionately shunned Wall Street during a bear market. This may seem unsurprising—who wants a job in finance when the market is tanking? But there are reasons to believe that these choices make a difference well into the future. Those who begin their careers in a bust are less footloose than their boom-time equivalents. Ms Schoar and Mr Zuo find that the average recession-scarred chief executive is more likely to have risen through the ranks of a firm than the norm, and is less likely to have switched employers or jumped from one industry to another.

The pool of candidates for top jobs in a particular industry reflects the choices that people make early on in their working lives. Yet these choices are the result not only of managers' preferences and abilities, as you might expect, but also of the economic circumstances that prevailed at the time they began working. Whether they were set up during a boom or a bust, today's firms are deeply affected by the economic fluctuations of the past.

1. “Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Style” by Antoinette Schoar and Luo Zuo. // NBER Working Paper No. 1759, November 2011.

http://www.nber.org/papers/w17590

2. “Entrepreneurship, Economic Conditions and the Great Recession”, by Robert W. Fairlie. IZA Discussion Paper No. 5725, May 2011.

http://ftp.iza.org/dp5725.pdf

3. “The Making of an Investment Banker: Macroeconomic Shocks, Career Choice, and Lifetime Income”, by Paul Oyer. NBER Working Paper No. 12059, February 2006.

http://www.nber.org/papers/w12059

URL:http://www.economist.com/node/21542390