Labor Market Implications of Institutional Changes in European Football

Abstract

This article analyzes the impact of policy changes, with a specific focus on the Bosman ruling, on the competitive nature of new entrants to the English Premier League. Relevant labor economics literature motivates the prediction that post-Bosman entrants will be more productive and consequently have a higher probability of earning/retaining a first-team spot in top European leagues. To test these predictions, proprietary data were collected on all players who entered the English Premier League in 4-year windows around the Bosman ruling. Regression discontinuity design displays evident discontinuity in player productivity parameters around the ruling, and the ability to decompose the treatment effect among subgroups of players identifies an incentive effect of increased competition for foreign players. Strong and robust empirical support for the motivating predictions is also established through the application of survival analysis indicating that post-Bosman entrants are dominant in terms of career duration to their pre-Bosman counterparts. Robustness of the results is established by controlling for relegated players through the application of stratified duration models and by testing for endogeneity bias for the productivity parameters employed.