Returns to Education in Professional Football

René Böheim and Mario Lackner

No 5665, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: After three years in the National Collegiate Athletic Association (NCAA), collegiate football players face a trade-off between spending more time in the NCAA and pursuing a career in the National Football League (NFL) by declaring for the draft. We analyze the starting salaries and signing bonuses for 1,673 rookies in the NFL, who entered the league between 2001 and 2009 through the NFL draft. We instrument the endogenous decision to enter the professional market with a player's month of birth. A player's true talent is only imperfectly observed and the instrument provides a causal link between time at college and subsequent salaries in the NFL through the relative age effect. Our estimates suggest that a player enjoys a 6% higher starting salary in the NFL, and a 15% higher first-year signing bonus, for each year with the college team. On average, a rookie is estimated to earn $131,000 more in his rookie season, if he enters the NFL one year later. Our analysis of a typical labor market in professional sports shows that the returns to education in sports are sizeable and surprisingly similar to returns to formal education. The results of our analysis provide information for the players who are deciding about declaring for the draft, however, also colleges and the teams in the NFL may find the results of interest.

Keywords: labor markets in sports; returns to education; ability bias; NFL (search for similar items in EconPapers)
JEL-codes: J31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-04
New Economics Papers: this item is included in nep-edu, nep-lab and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Economics Letters, 2012, 114 (3), 326-328

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Journal Article: Returns to education in professional football (2012)
Working Paper: Returns to Education in Professional Football (2011)
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