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June 08, 2020

Can sports offer an insight into the future of the labor market?

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Armchair sports fans love to argue over stats. Was Joshua vs Klitschko a greater fight than Ali vs Frazier? Were the 1998 New York Yankees superior to their 1961 predecessors? Would Tiger Woods beat Jack Nicklaus? As well as fuelling these discussions, the prevalence of information on punches landed, runs batted in, and putting percentages marks sportspeople out from other workers. In the degree to which their performances are quantified—and seemingly in many other ways—sportspeople are different from the rest of us. However, many of the features that make sportspeople so unusual today prefigure how normal workplaces of the future may be arranged. For example, some companies have begun to offer their employees free Fitbits in return for permission to track their activity levels, reminiscent of how the National Football League has measured its players’ rushing yards for nearly a century. Similarly, the explosion of the “gig economy” in the last decade, with the advent of Uber drivers and Deliveroo riders, mirrors the way tennis players and boxers have always sought to scratch a living from tournament to tournament.

Labor economists have long realized that sports provide a unique opportunity to answer questions that cannot be examined in other occupations. For example, how closely does workers’ pay match what they earn for their employers? This is impossible to answer in all but the most back-of-the-envelope way for a pilot or a bartender. But in baseball, the number of extra games a player wins for his team can be objectively calculated, as can the number of extra replica jerseys sold because he is on the team.

Increasingly, economists have also examined decisions made by sportspeople that reflect the human fallibility they share with us all. When cyclists take performance-enhancing drugs, they display the same poor ethical judgment as executives who fiddle their expenses and factory workers who call in sick on a warm Friday. When baseball umpires call a disproportionate number of balls on players from a different ethnic group, they demonstrate the same prejudices seen among police officers and hiring panels every day.

Sceptics of this line of research point out that sportspeople are not representative of the workforce as a whole. But as well-trained and highly specialized workers, they are arguably more representative of the modern labor market than fruit pickers and check-out operators, whose behavior has guided thinking among labor economists. Nor are all sportspeople millionaires, contrary to popular perception. In fact, all but a tiny fraction of tennis players and football players are semi-professional and earn less than the average income in their country. Of course, the presence of Serena Williams and Cristiano Ronaldo alongside thousands of such journeymen means that earnings inequality in sports is higher than in the labor market as a whole, but this is a rapidly increasing feature of many other occupations, as technology widens access to markets and concentrates wealth. In this way too, sports allow us a glimpse of the future of the labor market.

© Kerry L. Papps

Kerry L. Papps' full article, "Sports at the vanguard of labor market policy," will be published this summer on IZA World of Labor.

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