Earnings, Performance, and Nationality Discrimination in a Highly Competitive Labor Market as An Analysis of the English Professional Soccer League

Abstract

This article tests for the existence of nationality discrimination in the English professional soccer league. Although wage equations have typically been used by labor economists to identify discrimination, the approach may be plagued by unobserved productivity characteristics that are correlated with race and ethnicity, resulting in biased estimates of discrimination. This paper utilizes a "market test" approach to determine the existence of nationality discrimination. The results provide some evidence that players from South America may receive preferential labor market treatment, but this is only evident in the Premier (or highest) division of the league. In addition, this labor market discrimination appears to be a rational response from owners who observe increased attendance with a larger presence of South American players.