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Extreme wages, performance and superstars in a market for footballers

Author

Listed:
  • Rachel Scarfe

    () (School of Economics, University of Edinburgh)

  • Carl Singleton

    () (Department of Economics, University of Reading)

  • Paul Telemo

    () (School of Economics, University of Edinburgh)

Abstract

Using longitudinal wage and performance data for workers (players) and firms (teams), we study the sources of superstar wage effects in a particular market for sports talent: Major League Soccer in the United States. The top earners, whose annual salaries are mostly not accounted for by their past MLS performances, when compared alongside other footballers, are paid more because they attract significantly higher stadium attendances. There is no evidence that high residual salary spending by teams affects their relative performance in football terms, or that the amount teams spend on actual talent affects attendances. Taken together, these results suggest that a popularity-based explanation of superstar wage effects is appropriate among the top earners in this labour market.

Suggested Citation

  • Rachel Scarfe & Carl Singleton & Paul Telemo, 2020. "Extreme wages, performance and superstars in a market for footballers," Economics & Management Discussion Papers em-dp2020-04, Henley Business School, Reading University.
  • Handle: RePEc:rdg:emxxdp:em-dp2020-04
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    File URL: http://www.reading.ac.uk/web/FILES/economics/emdp202004.pdf
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    More about this item

    Keywords

    Superstar effects; Top incomes; Major League Soccer;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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