Relative age effect on the market value of elite European football players: a balanced sample approach

Research question Athletes born late in the selection year are disadvantaged compared to the relatively older in youth age groups. This leads to an overrepresentation of the early-born in professional teams, which is called the relative age effect (RAE). Previous studies examine the RAE on wage or market value with contradictory results. This paper aims to estimate the partial RAE on the market value of top-level European football players with a new methodology. Research methods We analysed a data set of players from the biggest five European football leagues over ten seasons (2008-2017). We argue that the conventional estimation of RAE fails to yield a partial effect, due to a sample selection bias. For various regression models, we use a stratified sampling method to balance the birth date distribution and eliminate the bias. Results and Findings Unlike prior studies, we found an extremely strong straight RAE in elite European football, especially for younger players. Using our methodology, we interpret RAE as a partial effect, which indicates that an earlier birth date within the calendar year results in a higher market value. Implications This paper contributes to the literature by proposing a new methodology to measure the partial RAE on labour market outcomes. Our results imply discrimination based on birth date in several countries, which needs to be reduced by better regulation of youth competitions. Our findings have implications for coaches and managers on how to account for relative age when training, transferring, and selecting players.