The age‐wage‐productivity puzzle: Evidence from the careers of top earners

Citation

Scarfe R, Singleton C, Sunmoni A & Telemo P (2024) The age‐wage‐productivity puzzle: Evidence from the careers of top earners. Economic Inquiry, 62 (2), pp. 584-606. https://doi.org/10.1111/ecin.13191

Abstract
There is an inverted u-shaped relationship between age and wages in most labor markets, but the effects of age on productivity are often unclear. We use panel data in a market of high earners, professional footballers (soccer players) in North America, to estimate age-productivity and age-wage profiles. We find stark differences; wages increase for several years after productivity has peaked, before dropping sharply at the end of a career. This poses the question: why are middle-aged workers seemingly overpaid? We investigate a range of possible mechanisms that could be responsible, only finding evidence that tentatively supports a talent discovery theory.

Keywords
ageing; labor productivity; sports labor markets; wages

Journal
Economic Inquiry: Volume 62, Issue 2