IDEAS home Printed from https://ideas.repec.org/p/shf/wpaper/2019018.html
   My bibliography  Save this paper

Wages and labor productivity. Evidence from injuries in the National Football League

Author

Listed:
  • Ian Gregory-Smith

    (Department of Economics, University of Sheffield)

Abstract

Studies in labor economics face severe difficulties when identifying the relationship between wages and labor productivity. This paper presents a novel identification strategy and demonstrates that the connection between wages and labor productivity is remarkably robust even when institutional constraints serve to distort the relationship. Identification is achieved by considering injuries to professional football players as an exogenous shock to labor productivity. This is an ideal empirical setting because injured players in the NFL can not be replaced easily because franchises are constrained by the salary cap. Injuries are shown to play a major role in franchise success and a tight connection between wages and marginal productivity emerges. This is in spite of regulatory frictions that serve to hold down wages for some workers

Suggested Citation

  • Ian Gregory-Smith, 2019. "Wages and labor productivity. Evidence from injuries in the National Football League," Working Papers 2019018, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2019018
    as

    Download full text from publisher

    File URL: http://www.sheffield.ac.uk/economics/research/serps/articles/2019_018
    File Function: First version, June 2019
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
    2. Jeffery Borland, 2003. "Demand for Sport," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 478-502, Winter.
    3. Manning, Alan, 2011. "Imperfect Competition in the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 11, pages 973-1041, Elsevier.
    4. Hanson, Andrew & Jolly, Nicholas A. & Peterson, Jeremy, 2017. "Safety regulation in professional football: Empirical evidence of intended and unintended consequences," Journal of Health Economics, Elsevier, vol. 53(C), pages 87-99.
    5. Stefan Késenne, 2000. "The Impact of Salary Caps in Professional Team Sports," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 422-430, September.
    6. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    7. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    8. Wladimir Andreff & Stefan Szymanski, 2006. "Handbook on the Economics of Sport," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270122, HAL.
    9. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    10. David Card & Gordon B. Dahl, 2011. "Family Violence and Football: The Effect of Unexpected Emotional Cues on Violent Behavior," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(1), pages 103-143.
    11. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 835-864.
    12. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
    13. Pedro Garcia-del-Barrio & Stefan Szymanski, 2009. "Goal! Profit Maximization Versus Win Maximization in Soccer," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(1), pages 45-68, February.
    14. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    15. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    16. Wladimir Andreff & Stefan Szymanski (ed.), 2006. "Handbook on the Economics of Sport," Books, Edward Elgar Publishing, number 3274.
    17. Steven N. Kaplan & Joshua Rauh, 2013. "It's the Market: The Broad-Based Rise in the Return to Top Talent," Journal of Economic Perspectives, American Economic Association, vol. 27(3), pages 35-56, Summer.
    18. John Charles Bradbury, 2019. "Determinants Of Revenue In Sports Leagues: An Empirical Assessment," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 121-140, January.
    19. Tony Caporale & Trevor Collier, 2015. "Are We Getting Better or Are They Getting Worse? Draft Position, Strength of Schedule, and Competitive Balance in the National Football League," Journal of Labor Research, Springer, vol. 36(3), pages 291-300, September.
    20. Andrew Zimbalist, 2003. "Sport as Business," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(4), pages 503-511, Winter.
    21. Borghesi, Richard, 2008. "Allocation of scarce resources: Insight from the NFL salary cap," Journal of Economics and Business, Elsevier, vol. 60(6), pages 536-550.
    22. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-571, September.
    23. John Vrooman, 2012. "The Economic Structure of the NFL," Sports Economics, Management, and Policy, in: Kevin G. Quinn (ed.), The Economics of the National Football League, edition 127, chapter 0, pages 7-31, Springer.
    24. Bang Dang Nguyen & Kasper Meisner Nielsen, 2014. "What Death Can Tell: Are Executives Paid for Their Contributions to Firm Value?," Management Science, INFORMS, vol. 60(12), pages 2994-3010, December.
    25. Toke Skovsgaard Aidt & Vania Sena, 2005. "Unions: Rent Creators or Extractors?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 103-121, March.
    26. Kerwin Kofi Charles & Jonathan Guryan, 2008. "Prejudice and Wages: An Empirical Assessment of Becker's The Economics of Discrimination," Journal of Political Economy, University of Chicago Press, vol. 116(5), pages 773-809, October.
    27. Steffen Huck & Andrew J. Seltzer & Brian Wallace, 2011. "Deferred Compensation in Multiperiod Labor Contracts: An Experimental Test of Lazear's Model," American Economic Review, American Economic Association, vol. 101(2), pages 819-843, April.
    28. Edward P. Lazear, 2018. "Compensation and Incentives in the Workplace," Journal of Economic Perspectives, American Economic Association, vol. 32(3), pages 195-214, Summer.
    29. Binmore, Ken, 2007. "Playing for Real: A Text on Game Theory," OUP Catalogue, Oxford University Press, number 9780195300574.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hoey, Sam & Peeters, Thomas & van Ours, Jan C., 2023. "The impact of absent co-workers on productivity in teams," Labour Economics, Elsevier, vol. 83(C).
    2. Sizhong Sun, 2023. "Firm heterogeneity, worker training and labor productivity: the role of endogenous self-selection," Journal of Productivity Analysis, Springer, vol. 59(2), pages 121-133, April.
    3. Yulia Chikish & Brad R. Humphreys, "undated". "The Impact of Health Shocks on Worker Performance: Evidence from Professional Sports," Working Papers 24-06, Department of Economics, West Virginia University.
    4. Mario Lackner & Hendrik Sonnabend, 2023. "Presenteeism when employers are under pressure: evidence from a high‐stakes environment," Economica, London School of Economics and Political Science, vol. 90(358), pages 477-507, April.
    5. Quinn A. W. Keefer & Thomas J. Kniesner, 2023. "“Injury risk, concussions, race, and pay in the NFL”," Journal of Risk and Uncertainty, Springer, vol. 67(2), pages 107-136, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dietl, Helmut M. & Duschl, Tobias & Lang, Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, Cambridge University Press, vol. 13(2), pages 1-30, August.
    2. Rodríguez Guerrero, Plácido, 2012. "La economía del deporte/The Economics of Sport," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 387-418, Agosto.
    3. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0122, University of Zurich, Institute for Strategy and Business Economics (ISU).
    4. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0039, University of Zurich, Center for Research in Sports Administration (CRSA).
    5. Patrice Bouvet, 2020. "L'économie du sport professionnel par équipe en Europe : production, monétisation, déficit et régulation Patrice BOUVET," Working Papers hal-02515012, HAL.
    6. Mara Konjer & Henk Erik Meier & Katrin Wedeking, 2017. "Consumer Demand for Telecasts of Tennis Matches in Germany," Journal of Sports Economics, , vol. 18(4), pages 351-375, May.
    7. Budzinski, Oliver & Feddersen, Arne, 2015. "Grundlagen der Sportnachfrage: Theorie und Empirie der Einflussfaktoren auf die Zuschauernachfrage," Ilmenau Economics Discussion Papers 94, Ilmenau University of Technology, Institute of Economics.
    8. Wladimir Andreff, 2009. "Équilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 591-633.
    9. Budzinski, Oliver & Müller-Kock, Anika, 2016. "Market power and media revenue allocation in professonal sports: The case of formula one," Ilmenau Economics Discussion Papers 102, Ilmenau University of Technology, Institute of Economics.
    10. PEETERS, Thomas & SZYMANSKI, Stefan, 2012. "Vertical restraints in soccer: Financial fair play and the English Premier League," Working Papers 2012028, University of Antwerp, Faculty of Business and Economics.
    11. Carlo Bellavite Pellegrini & Raul Caruso & Marco Di Domizio, 2021. "Relative wages, payroll structure and performance in soccer. Evidence from Italian Serie A (2007-2019)," DISCE - Quaderni del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    12. Pedro Garcia‐del‐Barrio & Francesc Pujol, 2009. "The Rationality of Under‐employing the Best‐performing Soccer Players," LABOUR, CEIS, vol. 23(3), pages 397-419, September.
    13. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.
    14. Helmut M. Dietl & Martin Grossmann & Markus Lang, 2011. "Competitive Balance and Revenue Sharing in Sports Leagues With Utility-Maximizing Teams," Journal of Sports Economics, , vol. 12(3), pages 284-308, June.
    15. Rachel Scarfe & Carl Singleton & Adesola Sunmoni & Paul Telemo, 2024. "The age‐wage‐productivity puzzle: Evidence from the careers of top earners," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 584-606, April.
    16. Marco Di Domizio & Carlo Bellavite Pellegrini & Raul Caruso, 2022. "Payroll dispersion and performance in soccer: A seasonal perspective analysis for Italian Serie A (2007–2021)," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 513-525, July.
    17. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Post-Print halshs-00677436, HAL.
    18. Paul Downward, 2014. "English professional football," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 17, pages 277-297, Edward Elgar Publishing.
    19. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2008. "Revenue Sharing, Reserve Clause and Salary Caps in Professional Team Sports Leagues," Working Papers 0026, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2009.
    20. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00677436, HAL.

    More about this item

    Keywords

    wages; labor; productivity; injuries; sports;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:shf:wpaper:2019018. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mike Crabtree (email available below). General contact details of provider: https://edirc.repec.org/data/desheuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.