Do high wage footballers play for high wage teams? The case of Major League Soccer

Rachel Scarfe, Carl Singleton and Paul Telemo

No em-dp2019-04, Economics Discussion Papers from Department of Economics, University of Reading

Abstract: Intuition and sports knowledge suggest that the most talented professional footballers play for the best teams, i.e., positive assortative matching based on productivity. We consider Major League Soccer between 2007 and 2017. We estimate a wage equation, finding that player and team fixed wage premiums are negatively correlated. This is a puzzle, especially because our estimates of players' wage premiums do correlate strongly with measures of their performance on the pitch, and there is evidence of positive teammate sorting. However, the estimated wage premiums of MLS teams are highly and negatively correlated with their success in the league and their home game attendances. This is consistent with an explanation whereby part of an MLS team's success comes from its ability to bargain down the price that it pays for talent.

Keywords: firm-specific wages; AKM wage equation; matching; superstar pay (search for similar items in EconPapers)
JEL-codes: J31 J49 Z22 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2019-06-01, Revised 2020-02-01
New Economics Papers: this item is included in nep-cul, nep-hrm, nep-knm and nep-spo
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published in International Journal of Sport Finance, 2021, 15(4): 177-190, https://fitpublishing.com/articles/do-high-wage-footballers-play-high-wage-teams-case-major-league-soccer

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http://www.reading.ac.uk/web/FILES/economics/emdp201904.pdf Revised version, 2020 (application/pdf)

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