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Productivity Shocks and Labour Market Outcomes for Top Earners: Evidence from Italian Serie A
Author(s) -
Carrieri Vincenzo,
Jones Andrew M.,
Principe Francesco
Publication year - 2020
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12347
Subject(s) - productivity , shock (circulatory) , economics , longitudinal data , football , labour economics , set (abstract data type) , demographic economics , macroeconomics , political science , demography , sociology , computer science , medicine , law , programming language
How are top earners affected by productivity shocks? We address this question using a unique longitudinal data set on the universe of professional football players in the Italian Serie A, representing 20% of top earners in Italy. We use traumatic injuries and adopt an IV strategy to provide causal estimates of the impact of productivity shocks on several labour market outcomes. We find that a 30‐day injury substantially affects the probability of contract renegotiation and reduces net wages by around 12%. We show that this large penalty is due to employer's precautionary motives rather than to shock‐induced reduction in current player's performance.