Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football

Bernardo Guimaraes, João Paulo Pessoa and Vladimir Ponczek

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We propose a model to study non-compete agreements and evaluate their quantitative effects. We explore an exogenous policy change that removed non-compete clauses in the market for Brazilian footballers, the Pele Act of 1998. The Act raised players' lifetime income but changed the wage profile in a heterogeneous way, reducing young players' salaries. We structurally estimate the model's parameters by matching wages and turnover profiles in the post Act period. By changing a single parameter related to the non-compete friction, we can match the changes in the age-earnings profile. We then show that the bulk of income gains is due to distributional forces, with efficiency gains playing a minor role.

Keywords: labor mobility; labor frictions; wage profile; labor turnover (search for similar items in EconPapers)
JEL-codes: J30 J41 J60 K31 Z22 (search for similar items in EconPapers)
Date: 2021-03-08
New Economics Papers: this item is included in nep-dge, nep-law, nep-lma and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1751

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