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Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football

Guimaraes, Bernardo, Pessoa, João Paulo and Ponczek, Vladimir (2021) Non-compete agreements, wages and efficiency: theory and evidence from Brazilian football. CEP Discussion Papers (1751). Centre for Economic Performance, LSE, London, UK.

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Abstract

We propose a model to study non-compete agreements and evaluate their quantitative effects. We explore an exogenous policy change that removed non-compete clauses in the market for Brazilian footballers, the Pele Act of 1998. The Act raised players’ lifetime income but changed the wage profile in a heterogeneous way, reducing young players’ salaries. We structurally estimate the model’s parameters by matching wages and turnover profiles in the post Act period. By changing a single parameter related to the non-compete friction, we can match the changes in the age-earnings profile. We then show that the bulk of income gains is due to distributional forces, with efficiency gains playing a minor role.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2021 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HC Economic History and Conditions
JEL classification: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J60 - General
K - Law and Economics > K3 - Other Substantive Areas of Law > K31 - Labor Law
Date Deposited: 21 Mar 2022 16:03
Last Modified: 21 Mar 2022 16:03
URI: http://eprints.lse.ac.uk/id/eprint/114417

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