Aggregate wages of players and performance in Italian Serie A

This paper investigates the relationship between players’ wages and sportperformance in the Italian top professi onal football lea gue—Serie A. The analysisfocuses on 14 seasons from 2001/2002 to 2014/2015. Findings show that aggregatewage expenditure is a robust predictor of success for Italian professional footballteams. We first exploited a fix ed-effects panel data and eventually we addressed theproblem of endogeneity by providing a dynamic IV specification of the model.Based on the System-GMM framework, we employed a model including laggedterms of dependent variables and covariates as instruments to control for endo-geneity as well as alternative exogenous instruments to control for geographical/environmental factors and socio-economic factors that could be the actual predictorsof performance through an indirect effect on payroll