Extreme wages, performance and superstars in a market for footballers

Rachel Scarfe (), Carl Singleton and Paul Telemo
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Rachel Scarfe: School of Economics, University of Edinburgh

No em-dp2020-04, Economics Discussion Papers from Department of Economics, University of Reading

Abstract: We study the determinants of superstar wage effects, asking whether productivity or popularity-based explanations are more appropriate. We use longitudinal wage and performance data for workers (players) and firms (teams) from a particular market for sports talent: Major League Soccer (MLS) in the United States. We find evidence that 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 and thus revenues. There is no evidence that higher residual salary spending by the teams affects their relative performance in football terms, or that the amounts the teams spend on actual talent affect 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.

Keywords: Superstar effects; Top incomes; Major League Soccer (search for similar items in EconPapers)
JEL-codes: D31 J24 J31 L83 Z22 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2020-03-20, Revised 2020-11-01
New Economics Papers: this item is included in nep-hrm, nep-lma and nep-spo
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Published in Industrial Relations: A Journal of Economy and Society, 60(1): 84-118, https://doi.org/10.1111/irel.12270

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http://www.reading.ac.uk/web/FILES/economics/emdp202004.pdf Revised version, 2020 (application/pdf)

Related works:
Journal Article: Extreme Wages, Performance, and Superstars in a Market for Footballers (2021)
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