How I survived the Econ Job Market

Come fall, I will collect my PhD from the University of Michigan and go to work as an assistant professor of finance at the Stony Brook University College of Business. It's a really excellent department, full of smart, good people doing interesting research, and it's in a really nice location, and, well, I'm very happy to be going there.

For me, this concludes the rite of passage known as the "economics job market" (or, to economists, simply "the Job Market"). It is difficult to overstate how important a component of the economics grad school experience the Job Market is. I'd always intended to do a lengthy post about the process, just to give outsiders a little taste of what it's like (kind of like I did with my first-year macro course). The problem is, when it came time to go on the Job Market, I went about it all wrong, ignoring or simply failing to follow almost every piece of advice that grad students receive. This is not to say that that advice is wrong; it's good advice! I'm just saying that I am a very unusual case, and therefore not the best person to be writing this post.

But heck, I'm going to write it anyway. Just keep in mind, my own approach is more of a "don't try this at home" kind of thing.

(Note: Economists can obviously skip most of this, since you know it already. For PhD students, I recommend reading John Cawley's guide to the job market instead of listening to anything I have to say. The following account is primarily for non-economists who want a window into our secret world.)


What is the Job Market?

The Job Market is the main process by which PhD economists get jobs, though not the only process. There are plenty of jobs outside the Job Market, which you get by applying in the normal way (cold calling, resume mailing, connections, etc.). But the Job Market has three advantages, namely:

1. The job advertisement, application, and interview processes are all centralized,

2. You get the resources of your academic department to help you send out your applications, and

3. You are almost completely assured of getting some sort of job at the end of the process.

Jobs that are included in the Job Market are almost all posted on one website: Job Openings for Economists, which is run by the American Economic Association. You find the jobs you want to apply for, you send a list of these to your department, and you find three or four people to write you letters of recommendation.

The department then does two things. The administrative people forward your letters to the employers, and the Placement Coordinator tries to help identify good targets to call and recommend you directly. (Here's a good place for me to give special thanks to Chris House, this year's Placement Coordinator at Michigan, who did a bang-up job, and put up with my unorthodox behavior with consummate patience.)

After applications go out, employers contact grad students for interviews. These interviews take place at the AEA's Annual Meeting in early January, which is a gigantic confab where most of the economists in the country go to eat free food and hobnob. As an interviewee, you generally don't have time to go to any of the presentations or speeches; you're running back and forth from hotel to hotel, going to interview after interview. This year's AEA Meeting was in Chicago.

You then wait a week or two, and the employers who are interested in you call you back and schedule a flyout. Flyouts, which happen in February and March, involve going to the place, meeting the people, getting taken to dinner, and presenting your research. After that, offers go out.

There is also something called the "Secondary Market" or "scramble," in which people who don't get jobs through the aforementioned process get matched with employers who couldn't find anyone to fill their slots. I don't know exactly how this works, but I think the Placement Coordinator has to do a lot of work, making phone calls and such. The sense I get is that essentially everyone at a top 50 school eventually winds up with some kind of job.

Which, if you think about it, is pretty awesome. Especially as things currently stand in our economy. Being an econ grad student has its drawbacks, but joblessness afterward is definitely not one of them.


What do you need in order to go on the Job Market?

You need a Job Market Paper, or "JMP." This is a piece of original research, usually the first chapter of your dissertation.

That's it! Really! That's all you need! In the words of the great professor Yusufcan Masatlioglu, "All you need is that one damn paper."

At your AEA Meeting interviews, you will mainly discuss your JMP. At your flyout, you will present this paper. You don't need to have published this paper; in fact, you don't need a single academic publication (most people save publishable papers for when they are already working as assistant profs, where the papers will count towards tenure). "All you need is that one damn paper."

The JMP is to economists what a demo reel is to animators. Although the research should be original and at least mildly interesting, the main purpose is to show off your skills - be they DSGE modeling, time series econometrics, game theory proofs, the ability to find novel instruments, or whatever. Whether or not you obtain a world-changing result is less important.

Actually, this is one area in which I didn't do the normal thing. My JMP (which you can read here) is more about an interesting result and a novel methodology than it is about showcasing my skills. Although I showed that I could run experiments and work with panel data, I didn't show the time-series econometrics or DSGE modeling skills I learned in my classes and in other research projects, and I definitely didn't show off any of the math skills that I have from my physics background. So my JMP, while (in my opinion) an interesting paper, wasn't really a complete "demo reel." That was risky.

For other examples of JMPs, check out the excellent papers of my fellow Michigan job candidates David Agrawal (tax), Jesse Gregory (labor/urban), Collin Raymond (micro theory), David Ratner (macro/labor), Caroline Weber (tax), Roy Chen (experimental), Gabriel Ehrlich (macro), Nora Dillon (labor), Bill Lincoln (trade), Noam Gruber (macro), and Brad Hershbein (education).


What kind of jobs do economists want from the Job Market?

Most economics grad students really, really want an academic job. It's part of the grad school culture to believe that academic jobs (or jobs at the Federal Reserve) strictly dominate all other kinds, regardless of money, location, or quality of the institution. (Keep in mind, I have no hard data to back this up, but this is just kind of the sense I get.) Consulting, for example, even though it pays more, is definitely viewed by most grad students as a fallback option. Maybe this is just because as a student in an academic department, you're surrounded by professors who chose the academic way of life, and so tend to think it's the greatest. And I guess if PhD students just wanted big bucks, they'd have gone for Masters in Financial Engineering instead.

Like most applicants, I applied to a mix of academic, private-sector, and government jobs; although I wasn't as dead set on academia as some of my peers, it ended up clearly being the best choice for me, given the quality of the department at Stony Brook.

Job Market applicants are strongly encouraged not to have location preferences - i.e., not to rule out any region of the country. I cant tell you how many times I heard this! "No location preferences!" But I had strong location preferences, and so in this way I totally flew in the face of everything I was told (sorry, Chris!). I wanted to live on one of the coasts, in or near a large city, preferably a place where I already knew a lot of people. So I ended up applying to far fewer places than most of my peers: whereas a normal Job Market candidate usually applies to about 120 places, I applied to only about 80. This meant that I got correspondingly fewer interviews at the AEA Meeting (14, which is slightly below the Michigan average). In the end I lucked out, finding a job in the NYC area where I have a number of friends. But stubbornly sticking to my location preferences was clearly a risky move ex ante.


What kind of Job Market candidates do the best?

In general, academic employers want someone who can publish a bunch of papers in top-ranked journals. Non-academic employers are rumored to want whoever the academic employers want, and some say that they content themselves with taking the people who didn't get the academic jobs (again, this seems weird to me, but whatever).

Academic departments often have "slots" to fill. Economics, as a profession, is divided into fields, and so a department will often look for a "macro person" who will be assumed to do things like DSGE macro models and VARs, or a "tax person," who will do, um, tax stuff. Etc. You signal what "slot" you will fill by what kind of things you put in your JMP, by what field classes you took, and to a lesser extent by what you say in your cover letter.

Yet another way in which I didn't take the usual path was in terms of what "slot" I went for. I took macro as my main field class, but my JMP, while relevant for macro issues, was not the kind of thing that macro people usually do. My JMP was an experiment. However, I also didn't apply to any of the traditional "experimental econ" schools (e.g. Texas A&M). So I was a bit of an unusual applicant, difficult to fit into a pre-existing slot. This probably hurt me somewhat; while in good hiring years, schools are much more likely to gamble on an idiosyncratic or unusual type of researcher, in bad years they are much more averse to that sort of risk...and this was not a good hiring year. It was definitely a big ex ante risk not to go on the Market in one of the standard categories.


What are the advantages and disadvantages of the way the Job Market is set up?

This part is purely subjective, of course.

The way the economics profession runs its Job Market has obvious advantages. With a centralized, standardized application system, you can send out a lot of applications in a relatively small time. The single location of the first-round interviews is incredibly convenient. And the fact that all the interviews and flyouts happen within a short space of time allows employers and candidates alike to weigh all their options and select the best fit (it also allows competitive bidding and negotiation). So as a market, I have to say that the Job Market works very well - exactly what we'd expect from the economics profession.

But I must say, the centralized system does seem to have some drawbacks. For one, the structure of the market forces departments to pick and choose where they push their own candidates. Typically, there will be a small number of "stars" that the department pushes very hard, in the hopes of getting them into top schools. The knowledge that there can only be a few of these "stars" is not lost on first- and second-year grad students. That can be stressful.

In general, the Job Market is very stressful for most of the people who participate in it, and not only because one's future hangs in the balance. The fact that everyone is doing the same thing at the same time, and judging their success by essentially the same criteria, invites people to spend their time comparing themselves to their peers instead of thinking about their own individual preferences and what they really want to do with their lives. This comparison is so frenzied and intense that the Job Market has its own anonymous forum, Economics Job Market Rumors, where the gossip flies fast and thick (here's a thread about yours truly; here's a second, and a third).

In fact, I must say that the whole process has a slightly unpleasant whiff of a hierarchical culture (the profession) telling people what to want in life, defining a game and then convincing people that winning that game is all that matters. I can't help being reminded just a tiny bit of the Japanese college entrance exam system.

I suppose that the latter is a big part of why I personally took such an unorthodox approach toward the Job Market. Instead of focusing on winning the game, I focused (perhaps excessively?) on doing only what I wanted to do. I wanted to do research that I thought was interesting, so I did it. I also wanted to apply only to places where I would really want to work, and so I did that too. I took the advice of the great urban economist Masahisa Fujita, who once told me just to do what I wanted to do and not to worry too much about where I ended up. That approach succeeded in lowering my stress level dramatically during the Job Market process (though it probably slightly raised the stress level of my dissertation committee and Michigan's Placement Coordinator, for which I apologize).

In the end, I found a great job; statistically speaking, I got lucky. The vast majority of economics job-seekers will benefit from being significantly more orthodox than I was, even if it comes at the cost of more temporary stress.

Anyway, the ever-exuberant anarchist in me looks at the Job Market and says: "Pah, look at this rigid apparatus of social control! Blow it all up. Decentralize it and leave everyone to their own devices. Let job seekers think about what kind of job and what kind of life they want instead of where they rank." But the pragmatist in me says: "No, this system works well. It's relatively quick and low-effort, and it ends up nearly guaranteeing a job to people who participate in it. That far outweighs the downsides." The pragmatist wins. And hey, the Job Market ended up working for me, so what do I have to complain about anyway?

(Final Note: In addition, I'd like to give special thanks to my thesis committee members, Miles Kimball, Bob Barsky, Uday Rajan, and Yusufcan Masatlioglu, for the nearly absurd amounts of help they've given me; Dave Agrawal and Jeff Smith, for all the valuable job-market advice; and, of course, Vinnie Vinjimoor of the UMich econ department front office, for being the most competent human being on the face of the planet.)