Personnel Economics in Sports
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Personnel Economics in Sports

Edited by Neil Longley

Sport is an effective industry in which to empirically test theories of personnel economics, primarily because the employer-employee relationship in sport is much more visible and transparent than in almost any other industry. This book examines personnel economics within the context of the professional sport industry. The chapters are organized around the core functional areas of personnel economics and cover all aspects of the employment relationship in sport – from recruiting and selection, to pay and performance, to work team design.
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Chapter 4: Determining the drivers of player valuation and compensation in professional sport: traditional economic approaches and emerging advances

Christian Deutscher

Abstract

An overview of the literature studying player performance and salaries is provided. The chapter argues that the ‘traditional’ approaches tended to view the drivers of players’ salaries as falling into one of four broad categories – experience, performance, talent, and popularity. It notes that using just these traditional drivers is deficient in that, collectively, they usually fail to explain 30 to 40 percent of the variation in salaries. It then discusses new advances in the literature that attempt to better incorporate into salary models factors like non-cognitive skills and work habits, and explains how researchers are now examining such player-characteristics as leadership skills, performance under pressure, and performance volatility to determine which, if any, of these factors may impact salary.

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