Micro Seminars EUR

Speaker(s)
Klaus Broesamle (Hertie School of Governance, Berlin)
Date
2012-10-19
Location
Rotterdam

Many events commonly referred to as luck can have drastic effects on people’s careers. A very common and economically meaningful ‘class’ of such events are shocks to the importance of an employee’s role or task, such as assignments to particular projects or posts they can be thought of as challenge shocks. To obtain estimates of the causal effect of such challenge shocks, this paper uses unanticipated natural disasters and analyzes how they impact on the career speed of British diplomats working in the a ected countries. A robust positive effect is found. The paper then di erentiates between two mechanisms that could drive this link: 1) disasters may ‘reveal’ the so far unknown ability of a ected diplomats which leads to a positive effect if diplomats are on average sufficiently able (the talent revelation mechanism); 2) disasters may have a training effect whereby diplomats dealing with a disaster gain experience that makes them promotable in the future (the experience mech- anism). These mechanisms correspond to two existing economic explanations of firm-internal upward mobility: employer learning and human capital accumulation, respectively. A test of competing predictions indicates that the experience effect is predominant in driving the positive link. Extraordinary events and challenges seem to be opportunities to ‘grow’ rather than be ‘discovered’.