Do High Wage Footballers Play for High Wage Teams? The case of Major League Soccer

19 Pages Posted: 20 Dec 2018 Last revised: 27 Jun 2019

See all articles by Rachel Scarfe

Rachel Scarfe

University of Edinburgh - School of Economics

Carl Singleton

Department of Economics, University of Reading

Paul Telemo

University of Edinburgh

Date Written: June 25, 2019

Abstract

Intuition and sports knowledge suggest 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 teammate sorting. One potential solution to this puzzle would be that players match to teams according to some sort of compensating wage differential, for example from their desire to play for successful or well-supported teams; the estimated wage premiums of MLS teams are highly and negatively correlated with their success in the league and their home game attendances.

Keywords: firm-specific wages, AKM wage equation, matching, superstar pay

JEL Classification: J31, J49, Z22

Suggested Citation

Scarfe, Rachel and Singleton, Carl and Telemo, Paul, Do High Wage Footballers Play for High Wage Teams? The case of Major League Soccer (June 25, 2019). Available at SSRN: https://ssrn.com/abstract=3297644 or http://dx.doi.org/10.2139/ssrn.3297644

Rachel Scarfe

University of Edinburgh - School of Economics ( email )

31 Buccleuch Place
Edinburgh, EH8 9JT
United Kingdom

Carl Singleton (Contact Author)

Department of Economics, University of Reading ( email )

Whiteknights
Reading, Berkshire RG6 6AH
United Kingdom

Paul Telemo

University of Edinburgh ( email )

Old College
South Bridge
Edinburgh, Scotland EH8 9JY
United Kingdom

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