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Extreme wages, performance and superstars in a market for footballers

Scarfe, R., Singleton, C. ORCID: https://orcid.org/0000-0001-8247-8830 and Telemo, P. (2021) Extreme wages, performance and superstars in a market for footballers. Industrial Relations, 60 (1). pp. 84-118. ISSN 1468-232X

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To link to this item DOI: 10.1111/irel.12270

Abstract/Summary

We study the determinants of superstar wage effects, asking whether productivity or popularity-based explanations are more appropriate. We use longitudinal wage and performance data for workers (players) and firms (teams) from a particular market for sports talent: Major League Soccer (MLS) in the United States. We find evidence that the top earners, whose annual salaries are mostly not accounted for by their past MLS performances, when compared alongside other footballers, are paid more because they attract significantly higher stadium attendances and thus revenues. There is no evidence that higher residual salary spending by the teams affects their relative performance in football terms, or that the amounts the teams spend on actual talent affect attendances. Taken together, these results suggest that a popularity-based explanation of superstar wage effects is appropriate among the top earners in this labour market.

Item Type:Article
Refereed:Yes
Divisions:Arts, Humanities and Social Science > School of Politics, Economics and International Relations > Economics
ID Code:94487
Uncontrolled Keywords:Superstar effects, Top incomes, Labour productivity, Major League Soccer
Publisher:Wiley

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