Superstar Effects in Sport

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Abstract
This article investigates wage determination among professional soccer players appearing in the Italian league. Given the popularity of “top” soccer players, the relationship between individual productivity and pay can lead to “superstar” effects. In that context, the marginal revenue product of a soccer 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. The authors use rare data on individual earnings and other personal characteristics of a set of soccer players in the 1995-1996 Italian league season to estimate human capital earnings equations and test for superstar effects in wage determination via convexity of earnings in performance. Earnings are found to be highly convex in two performance measures after controlling for a set of personal characteristics and team fixed effects.