The age‐wage‐productivity puzzle: Evidence from the careers of top earners

Rachel Scarfe, Carl Singleton, Adesola Sunmoni and Paul Telemo

Economic Inquiry, 2024, vol. 62, issue 2, 584-606

Abstract: There is an inverted u‐shaped relationship between age and wages in most labor markets, but the effects of age on productivity are often unclear. We use panel data in a market of high earners, professional footballers (soccer players) in North America, to estimate age‐productivity and age‐wage profiles. We find stark differences; wages increase for several years after productivity has peaked, before dropping sharply at the end of a career. This poses the question: why are middle‐aged workers seemingly overpaid? We investigate a range of possible mechanisms that could be responsible, only finding evidence that tentatively supports a talent discovery theory.

Date: 2024
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https://doi.org/10.1111/ecin.13191

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Working Paper: The Age-Wage-Productivity Puzzle: Evidence from the Careers of Top Earners (2023)
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