Matteo Pazzona (Brunel University London): “Long term contracts and Productivity in a High Skilled Labour Market”

Do longer contracts affect the performance of highly skilled workers in competitive labour markets? Answering such a question has been traditionally difficult due to some limitations, such as data availability and reliability and model misspecification.

This work seeks to improve on the existing literature, employing professional football, as a case study. Using an unique dataset – that includes the universe of players in the Italian Serie A for 18 seasons – this study finds a positive effect of longer contracts on performance. Results are robust to using both parametric and non-parametric methods, as well as multiple performance measures, based on objective and subjective parameters.

This work also finds that the treatment effects are not constant among the workers. The analysis reveals that longer contracts provide an incentive to perform better for migrant workers, and those with medium levels of transfer market values. Finally, this study finds evidence of negative selection on gains.