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

Bernardo Guimaraes, João Paulo Pessoa and Vladimir Ponczek

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2021-03-08
New Economics Papers: this item is included in nep-law and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://eprints.lse.ac.uk/114417/ Open access version. (application/pdf)

Related works:
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:ehl:lserod:114417

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