We add to the literature on migration and earnings by showing how migration affects one particularly highly skilled set of migrants: European hockey players. We examine salary differentials using a sample of newly signed free agents from the 2010-11 and 2011-12 seasons. We also apply several new productivity measures that sharpen the specification of the wage equation, especially regarding productivity on defense and special teams play. We find that European players receive a premium relative to otherwise identical Canadian and US-born players. We present evidence that this premium is due to the greater mobility of European players and their resulting access to alternative employment possibilities.
Peter von Allmen, Michael Leeds and Julian Malakorn
Anthony Krautmann, Peter von Allmen and Stephen J.K. Walters
We examine bargaining for long-term contracts in baseball, which usually involves agents negotiating on behalf of players. We show that when an agent represents a large portfolio of clients, the agent’s interests may diverge from those of the client. Such agents face less risk than their clients and therefore may calculate a minimum-acceptable contract offer that exceeds that of their clients. Using a sample of nearly 500 eligible players, we test for the presence of this principal–agent problem and find evidence that the size of an agent’s client portfolio negatively affects the probability of successfully negotiating a long-term contract. The results have important implications for both players and team management as they shed light on the circumstances under which incentive compatibility may be compromised.