Career Prospects and Effort Incentives: Evidence from Professional Soccer

Abstract

It is difficult to test the prediction that future career prospects create implicit effort incentives because researchers cannot randomly “assign” career prospects to economic agents. To overcome this challenge, we use data from professional soccer, where employees of the same club face different external career opportunities de- pending on their nationality. We test whether the career prospect of being selected to a Euro Cup national team affects players’ pre-Cup performances, using nationals of countries that did not participate in the Euro Cup as a control group. We find that the Euro Cup career prospect has positive effects on the performances of play- ers with intermediate chances of being selected to their national team, but negative effects on the performances of players whose selection is very probable. Our findings have implications for the incentive effects of within-firm promotions and of external career opportunities.

Keywords: incentives, effort, career concerns, reputation, contests, tournaments, promotions