The Effects of Employment Shocks on the Self-Employed: Evidence from Discontinuities in Professional Golf

Abstract

Employment shocks can produce persistent earnings losses, yet it is unclear whether these losses result from changes in productivity or labor market frictions. I estimate the long-run effects of a change in job quality on earnings and productivity by exploiting discontinuities in the rules governing membership on professional golf tours. Despite estimating large initial earnings effects, I find that these treatment effects quickly dissipate. Furthermore, I find no productivity effects from treatment. High job transition rates suggest that hiring and firing frictions are weak in golf and, thus, employment shocks have less persistent consequences than in the broader labor market.