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Pay and Performance in the Spanish Soccer League: Who Gets the Expected Monopsony Rents?

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  • Pedro Garcia-del-Barrio

    ()
    (School of Economics and Business Administration, University of Navarra)

  • Francesc Pujol

    ()
    (School of Economics and Business Administration, University of Navarra)

Abstract

In the labour markets that gather few companies to compete for many workers, the economic theory predicts the existence of monopsony rents. It should also be the case of the Spanish soccer industry. However, the clubs of this league do not profit from the expected rents. The purpose of this paper is to explain such a contradictory evidence. Spanish soccer labour market is characterised by the presence of some outstanding workers (soccer superstars). It means that the winner-take-all hypothesis holds when analysing the soccer industry. This idea states that being slightly better than the other workers generates large earnings differentials (escalating earnings of league superstars). This paper considers the soccer industry as a dual labour market. One segment of this market could certainly be characterised by the traditional analysis of monopsony, in which a little number of clubs are willing to hire many potential candidates. The opposite occurs when studying the case of the superstar players. A number of entities (not just Spanish clubs) would fiercely compete for hiring those few superstars, who accumulate market power. The paper suggests that the monopsony rents that the clubs were to obtain from most of the soccer players, would eventually revert to the superstars, who enjoy strong bargaining power. In order to empirically test this idea, the paper analyses the data of the Spanish professional soccer league, for the season 2001/02. The analysis pays especial attention to the economic impact associated to each particular player, as far as it may help to explain the large wage differentials that could not be explained due to performance differentials.

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File URL: http://www.unav.es/facultad/econom/files/workingpapersmodule/@random437a054f974a0/1132584458_wp0504.pdf
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Bibliographic Info

Paper provided by School of Economics and Business Administration, University of Navarra in its series Faculty Working Papers with number 05/04.

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Length: 25 pages pages
Date of creation: Mar 2004
Date of revision:
Publication status: Published, Managerial and Decision Economics, 2007, vol. 28: pp. 57-70
Handle: RePEc:una:unccee:wp0504

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Web page: http://www.unav.es/facultad/econom

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  1. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December.
  2. Sherwin Rosen & Allen Sanderson, 2000. "Labor Markets in Professional Sports," NBER Working Papers 7573, National Bureau of Economic Research, Inc.
  3. Hunt, Joseph W, Jr & Lewis, Kenneth A, 1976. "Dominance, Recontracting, and the Reserve Clause: Major League Baseball," American Economic Review, American Economic Association, vol. 66(5), pages 936-43, December.
  4. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-58, December.
  5. Szymanski, Stefan, 2001. "Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer," Economic Journal, Royal Economic Society, vol. 111(469), pages F69-84, February.
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Cited by:
  1. Benno Torgler & Sascha L. Schmidt & Bruno S. Frey, 2006. "Relative Income Position and Performance: An Empirical Panel Analysis," CREMA Working Paper Series 2006-03, Center for Research in Economics, Management and the Arts (CREMA).
  2. Torgler, Benno & Schmidt, Sascha L & Frey, Bruno S., 2006. "The Power of Positional Concerns: A Panel Analysis," Berkeley Olin Program in Law & Economics, Working Paper Series qt1z14v7zt, Berkeley Olin Program in Law & Economics.
  3. Justina A.V. Fischer & Benno Torgler, 2006. "Does Envy Destroy Social Fundamentals? The Impact of Relative Income Position on Social Capital," CREMA Working Paper Series 2006-04, Center for Research in Economics, Management and the Arts (CREMA).
  4. Roberto Antonietti, 2008. "Il ruolo economico dell’arbitro di calcio: una rassegna della letteratura e alcune questioni aperte," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 4(3), pages 75-103, Dicembre.
  5. Bridgewater, Sue & Kahn, Lawrence M. & Goodall, Amanda H., 2011. "Substitution and complementarity between managers and subordinates: Evidence from British football," Labour Economics, Elsevier, vol. 18(3), pages 275-286, June.

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