The Impact of Foreign Direct Investment on the Relative Return to Skill

25 Pages Posted: 27 Apr 2001

See all articles by Robert Simmons

Robert Simmons

Lancaster University

Claudio Lucifora

Università Cattolica del Sacro Cuore di Milano ; IZA Institute of Labor Economics

Date Written: February 2001

Abstract

In this paper we investigate wage determination among professional football players ranked in the Italian A and B series. Since football is a highly labor intensive activity, both scale economies and scarcity of the most talented players emerge as the main determinants of the high earnings levels observed. In particular, the marginal revenue product of a player is related to the extra price that a spectator is willing to pay to see him play (live or on television) times the number of spectators who are attracted. In this context, the relationship between individual productivity and pay can lead to "superstar" effects. We use data on individual earnings and other personal characteristics of Italian football players in the 1995/6 season to estimate pseudo-human capital earnings equations and test the relevance of "superstar" effects in wage determination. Significant "superstar" effects are found in earnings after controlling for a large set of personal characteristics, individual performance indicators and either team fixed effects or team-specific variables.

JEL Classification: J2, J3, J4

Suggested Citation

Simmons, Robert and Lucifora, Claudio, The Impact of Foreign Direct Investment on the Relative Return to Skill (February 2001). Available at SSRN: https://ssrn.com/abstract=268248 or http://dx.doi.org/10.2139/ssrn.268248

Robert Simmons (Contact Author)

Lancaster University ( email )

Lancaster LA1 4YX, LA1 4YX
United Kingdom

Claudio Lucifora

Università Cattolica del Sacro Cuore di Milano ( email )

Department of Economics and Finance
Largo Gemelli, 1
20123 Milano
Italy
+39 027 234 2525 (Phone)
+39 027 234 2781 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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