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

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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.

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APA

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), 584–606. https://doi.org/10.1111/ecin.13191

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