IDEAS home Printed from https://ideas.repec.org/a/vrs/crebss/v4y2018i2p47-56n6.html
   My bibliography  Save this article

Handling heteroskedasticity in labour demand functions of athletes

Author

Listed:
  • Rappai Gábor

    (Department of Economics and Econometrics, Faculty of Business and Economics, University of Pécs, Pécs, Hungary)

  • Fűrész Diána Ivett

    (PhD Student, University of Pécs, Pécs, Hungary)

Abstract

Based on previous research it can be stated that modelling sport economics related demand curves (e.g. demand for sport events and athletes) is different from other types of modelling. The difference lies in the fact that some parts of the demand curves are nearly horizontal in case of sport goods and nearly vertical in case of athletes, because the price of sport events is inflexible and at the same time, salaries of top athletes are extremely flexible. This study investigates parameter estimation methods appropriate for the relevant demand functions of sport economics. In this cases the generally used ordinary least squares estimator is less robust, so the weighted least squares estimators are able to handle heteroskedasticity. If the distribution of the variables is known, the Newey-West heteroscedasticity corrected estimates give even stronger results. The empirical study analyses footballer transfer fees in top European leagues and identifies a threshold at which the traditional supply-demand functions are not appropriate. According to the results, word class athletes, in a way, can be considered prestige goods for which demand may be irrational.

Suggested Citation

  • Rappai Gábor & Fűrész Diána Ivett, 2018. "Handling heteroskedasticity in labour demand functions of athletes," Croatian Review of Economic, Business and Social Statistics, Sciendo, vol. 4(2), pages 47-56, November.
    • Handle: RePEc:vrs:crebss:v:4:y:2018:i:2:p:47-56:n:6
    DOI: 10.2478/crebss-2018-0012
    as

    Download full text from publisher

    File URL: https://doi.org/10.2478/crebss-2018-0012
    Download Restriction: no
    File URL: https://libkey.io/10.2478/crebss-2018-0012?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Wladimir Andreff & Stefan Szymanski (ed.), 2006. "Handbook on the Economics of Sport," Books, Edward Elgar Publishing, number 3274.
    2. Wladimir Andreff, 2015. "Disequilibrium Sports Economics: Competitive Imbalance and Budget Constraints," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01305633, HAL.
    3. Rosen, Sherwin & Sanderson, Allen, 2001. "Labour Markets in Professional Sports," Economic Journal, Royal Economic Society, vol. 111(469), pages 47-68, February.
    4. Rosen, Harvey S & Quandt, Richard E, 1978. "Estimation of a Disequilibrium Aggregate Labor Market," The Review of Economics and Statistics, MIT Press, vol. 60(3), pages 371-379, August.
    5. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    6. Wladimir Andreff & Stefan Szymanski, 2006. "Handbook on the Economics of Sport," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00270122, HAL.
    7. Peter J. Sloane, 2006. "Rottenberg and the Economics of Sport after 50 years: An Evaluation," IASE Conference Papers 0642, International Association of Sports Economists.
    8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    9. Goldfelfd, Stephen M. & Quandt, Richard E., 1975. "Estimation in a disequilibrium model and the value of information," Journal of Econometrics, Elsevier, vol. 3(4), pages 325-348, November.
    10. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    11. Wladimir Andreff, 2015. "Disequilibrium Sports Economics: Competitive Imbalance and Budget Constraints," Post-Print hal-01305633, HAL.
    12. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lenten, Liam J.A. & Geerling, Wayne & Kónya, László, 2012. "A hedonic model of player wage determination from the Indian Premier League auction: Further evidence," Sport Management Review, Elsevier, vol. 15(1), pages 60-71.
    2. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0136, University of Zurich, Institute for Strategy and Business Economics (ISU).
    3. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.
    4. António Sérgio Ribeiro & Francisco Lima & Sascha Kraus & Ferran Calabuig, 2022. "Tournaments within football teams: players’ performance and wages," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 4884-4901, December.
    5. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    6. Wladimir Andreff, 2017. "Complexity Triggered by Economic Globalisation— The Issue of On-Line Betting-Related Match Fixing," Post-Print hal-03207049, HAL.
    7. Andreff, Wladimir, 2007. "Régulation et institutions en économie du sport," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 1.
    8. Marco Di Domizio & Mattia Palombini, 2011. "Competitività orizzontale e verticale nel ciclismo professionistico: alcune riflessioni sul circuito pro tour," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 6(3), pages 35-54, Febbraio.
    9. Wladimir Andreff, 2017. "Complexity Triggered by Economic Globalisation— The Issue of On-Line Betting-Related Match Fixing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03207049, HAL.
    10. Patrice Bouvet, 2020. "L'économie du sport professionnel par équipe en Europe : production, monétisation, déficit et régulation Patrice BOUVET," Working Papers hal-02515012, HAL.
    11. Ian Gregory‐Smith, 2021. "Wages And Labor Productivity: Evidence From Injuries In The National Football League," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 829-847, April.
    12. Geoffrey N Tuck & Athol R Whitten, 2013. "Lead Us Not into Tanktation: A Simulation Modelling Approach to Gain Insights into Incentives for Sporting Teams to Tank," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    13. Pamela Wicker & Christoph Breuer, 2015. "How the Economic and Financial Situation of the Community Affects Sport Clubs’ Resources: Evidence from Multi-Level Models," IJFS, MDPI, vol. 3(1), pages 1-18, February.
    14. Liam J A Lenten & Wayne Geerling & László Kónya, 2010. "A Hedonic Model of Player Wage Determination from the Indian Premier League Auction#," Working Papers 2010.04, School of Economics, La Trobe University.
    15. Richard Pomfret & John K. Wilson, 2011. "The Peculiar Economics of Government Policy towards Sport," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(1), pages 85-100.
    16. Wladimir Andreff, 2009. "Équilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 591-633.
    17. Goodall, Amanda H. & Kahn, Lawrence M. & Oswald, Andrew J., 2011. "Why do leaders matter? A study of expert knowledge in a superstar setting," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 265-284, March.
    18. Jean-François Bourg & Jean-Jacques Gouguet, 2010. "The Political Economy of Professional Sport," Books, Edward Elgar Publishing, number 13177.
    19. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: Competition and regulation in north American vs. European professional team sports leagues," Post-Print halshs-00677436, HAL.
    20. Paul Downward, 2014. "English professional football," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 17, pages 277-297, Edward Elgar Publishing.

    More about this item

    Keywords

    demand curves; football market transfers; robust estimation methods; sports economy;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vrs:crebss:v:4:y:2018:i:2:p:47-56:n:6. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.sciendo.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.