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From Madrid to Mecca: Wage Premiums in a Specialized Labor Market

Author

Listed:
  • Matthew Gnagey
  • Alvaro La Parra-Perez

Abstract

We estimate a 400% wage premium for football players transferring from top European leagues to Saudi Arabia in the summer of 2023 compared to those with similar observable characteristics transferring to different clubs within the same leagues. The results are robust to using propensity score matching and other specifications addressing endogeneity. Our analysis does not find evidence for culture driving the premium. Instead, it may be driven by several disamenities, including reputation concerns over Saudi Arabia's human rights record, lower-quality competition, and reduced global media exposure.

Suggested Citation

  • Matthew Gnagey & Alvaro La Parra-Perez, 2025. "From Madrid to Mecca: Wage Premiums in a Specialized Labor Market," Journal of Sports Economics, , vol. 26(4), pages 454-496, May.
    • Handle: RePEc:sae:jospec:v:26:y:2025:i:4:p:454-496
    DOI: 10.1177/15270025251324934
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    More about this item

    Keywords

    Compensating wage differentials; European football; Saudi Arabia; specialized labor markets;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z20 - Other Special Topics - - Sports Economics - - - General

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