Ang Sun Zhichao Wei Oct 29, 2012

1. Once a Loser, Always a Loser?The effect of relegation on future career development in the England Soccer League Ang Sun Zhichao Wei Oct 29, 2012

2. Research Question 1 • The effect of job assignment on long-term career development • A signal for future employers • Opportunities for human-capital accumulation in the work place • In the context of economic crisis Oreopoulos, Wacher and Heisz (2012) • Little empirical research on state dependence of job quality

3. Research Question 2 • Human-capital accumulation in the work place • Empirical work on evaluating on-the-job training programs • Learning by doing: Argote and Epple (1990) and Thompson (2010) • We show dominant importance of practice in the soccer industry

4. The closely-relegated versus closely-non-relegated research design • Study the state dependence of job quality by exploiting the setting of relegation of the league in England. • Compare the teams ranked 3rd-last and 4th-last. • Identifying assumption: The team on the margin but that succeeded in maintaining its position in the Premier League forms a valid counterfactual for the team on the margin but that is relegated to the second-tier league.

5. Main Findings • Main findings: • No difference in turnover (dropout or transfer) • The players in the relegated teams played in lower-ranked clubs, had more appearances in the first three years after relegation, but eventually played in higher-ranked clubs four years after relegation. • This pattern is driven by players below 30. Older players are worse off in both the short run and long run.

6. Interpretations • The relegated team invests less in the transfer market, and players have more appearances in which to practice. This helps the players accumulate human capital (or slows down human-capital depreciation) and land relatively goodteamsin the future.

7. External Validity • Methodological advantages • Interesting and surprising results • The extent of practice, future career development are easier to measure, and these measures closely mirror that in many immediately relevant domains • The growing tradition of research that exploits the wealth of data and well-defined incentives in sports to investigate more general economic phenomena( Kotchen and Potoski, 2011)

8. Background on English football league system---Hierarchical format

9. Hierarchical revenues • Television revenues shared exclusively among the Premier League members since 92 season • Huge gap in revenues between the 1st -and 2nd –tier leagues The average Premier League team receives £45 million, while the average Football League Championship club receives £1 million.

10. The big effect of relegation on clubs and players • For clubs Consequent financial problems including, in some cases, liquidation. • For relegated team players • Immediate transfers are restricted • Less and lower-quality on-the-job training (-) • Poorer facilities and limited access to other resources (-) • Face weaker external and internal competition (?)

13. Data • Focus on the whole career path of those who were once on the margin of relegation • Step 1 : names of the clubs once on the margin • Step 2 : the quad of each team in the season when on the margin of relegation • Step 3 : based on the player roster, look for the player-level information in two relevant datasets to construct a panel by player and by time

14. Player-level info: data source 1 • Online dataset Soccer Base • Advantage: Rich info Date of birth, birth place, nationality, height, weight, position, all teams on which player played, the exact period played on each team (including the team he has contract with and the teams he was loaned or swapped to), transfer fee for each transfer he experienced, appearances and goals on each team for which he played. • Disadvantage Appearances are aggregated to club level

15. Records precise time interval for experiences in each club for each player • Match the data with yearly rankings • Use this data set for the empirical analysis about the long-term placement of players, including the ranking of the club on which he played and signed up with at each point of change in contract.

16. Player-level info: data source 2 • Online dataset Player History • Advantage: aggregates players' performance to each season instead of club • Disadvantage: No info about a loan or swap No record for transfers in the middle of a season. No info about transfer fee.

17. Use data source 2 to examine the change in appearances after relegation. • The changes can be detected even if a player stays in the same club after relegation.

18. Summary statistics

19. Third- last versus fourth-last teams

21. Empirical Strategy • The relegated versus non-relegated research design suggests the following specification:

22. Heterogeneous effect across players • Direct implication: Younger players should “benefit more” in long-term job placement • A Triple-Difference Strategy will not work! • Categorize the sample into two sub-groups according to the age at relegation season

23. Discussing different measures (1) • Two measures for career development Team ranking  job quality Transfer fee market value • Use rank as a measure for job quality Higher ranking also means higher wage wage=basic pay + appearance money + bonuses

24. Measure job quality

25. The basic average annual pay of England’s professional players Sources: from internal PFA union files.

26. Measure market value : transfer fee

27. Discussing different measures (2) • Use transfer fee as a measure for market value • Selected sample? Relegated team players: 3.03 transfers Non-relegated team players: 2.94 transfers Over 90% of the players experienced at least one transfer after season 0 • Measurement error in the dependent variable: As long as the error is not correlated with relegation assignment, it only results in a larger error variance.

28. Measure the degree of practice • Total annual appearances (including substitute appearances) • Appearances in starting line-up • Issue of measurement • Appearances may not be able to capture the exact minutes • Intensity

29. Graphical presentation on the primary findings

34. Understand the mechanism

36. Other outcomes

40. Results of the statistical models • Preview • All results from fitting the Difference-In-Difference regression are consistent with the graphical patterns shown using raw data • The regression results are robust to player fixed-effect and calendar-year fixed-effect

41. Table 3 Difference-In-Difference estimation on the effect of relegation on the ranking of the club signed up

42. Table 4- DID estimation on the effect of relegation on the ranking of club played (Including the cases of being loaned or swapped to other clubs)

43. Table 5- Difference in difference estimation on turnover

44. Transfer fee

45. Appearances

46. Dropout ratetop panel <30; bottom panel>=30

47. Transfer ratetop panel <30; bottom panel>=30

48. Ranking of the team on which one played top panel <30; bottom panel>=30

49. Appearancestop panel <30; bottom panel>=30

50. Concluding remarks • A negative causal relationship between current job quality and future job quality. • The big impact of practice or, more generally, learning-by-doing on human-capital accumulation in the specific industry of the English soccer league