Has the Economic Theory Job Market Returned to Equilibrium?

When I was on the job market in 2014, everyone thought that it was terrible to be a theorist. The profession has moved dramatically toward empirical work, so all the hiring was there. But lots of new PhDs were still doing theory, so the supply of theorists exceeded demand and they had a hard time finding jobs.

My school is hiring in Game Theory / Industrial Organization this year, and based on my previous experience I expected a flood of applications from theorists- but it never arrived. We got substantially fewer applications than when we hired in Applied Micro a couple years ago, and even in the applications we did get, lots were out-of-field or doing empirical IO. I think we will still be able to hire well, I’m certainly happy with the three candidates we are flying out, but there is a lot less depth than I expected. It seems that PhD students have got the message that the demand for theorists is low, and so not many choose theory anymore.

I haven’t been able to find great data to either confirm or rebut my impressions; the closest is the data from this 2019 report with a low response rate. There is no “theory” field in it but I think the closest proxies are “Math & Quantitative Methods” and “Microeconomics”, which collectively made up 20% of demand but only 14% of supply.

I’d be interested to hear what everyone else has seen recently- is doing economic theory once again a sane career move?

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