IMPACT OF IMPORTING FOREIGN TALENT ON PERFORMANCE LEVELS OF LOCAL COWORKERS

1
IMPACT OF IMPORTING FOREIGN TALENT ON PERFORMANCE
LEVELS OF LOCAL CO-WORKERS

• J. Alvarez (Universidad Complutense, Spain)
• D. Forrest (University of Salford, UK)
• I. Sanz (Universidad Complutense, Spain)
• J. D. Tena (Universidad Carlos III, Spain and
  Universita di Sassari, Italy)

2
Economics of migration

• Migration a major issue in Europe and America
• Controversy over whether it benefits the host
  economy
• One channel in which it may improve local incomes
  is if skills are transmitted to local workers
• The SPILLOVER HYPOTHESIS proposes that, when
  workers operate in teams, skilled imported labour
  brings new skills and approaches that permanently
  raises productivity of local workers

3
THE CREATIVE SECTOR

• Testing the spillover hypothesis potentially
  contributes to policy debate
• In creative industries, where team work is
  important, unions argue that immigrants prevent
  the country achieving a reputation because they
  take the place of young local performers who
  thereby fail to develop their skills
• Thus unions claim that, e.g. bringing in foreign
  musicians prevents a country ever developing an
  indigenous musical culture and reputation
• In contrast, the spillover hypothesis represents
  local musicians as able to learn from foreign
  colleagues and in this case skilled immigration
  promotes the development of the local sector
• Sport offers a unique environment to test the
  spillover hypothesis

4

• FIRST- the usual reason (productivity in sport
  more readily measured than in other sectors)
• SECOND- in sport, local players work in teams
  with skilled foreigners but then also go off on
  their own to play in international competition
• Therefore we can test whether past exposure to
  foreigners in a domestic league promotes greater
  achievement in international competition

5
Theoretical model

• Model with two players unions and regulators.
• Regulators set the restriction to the number of
  foreign players in order to
• Appease unions.
• Maximise the probability of success for national
  teams
• Trade-off problem benefits arise in the long run
  from the interaction of national and foreign
  players.
• Result the optimal number of players will depend
  on, for example,the type of regulator (his time
  preference).

6
European basketball

• Sample
• 47 countries over the period 1986-2007.
  Unbalanced panel
• Source for foreign players Eligibility
  Department of FIBA. Number of Licence A and B
  players.
• Spillovers
• Basketball is a game in which spillovers go from
  a unique leader (US) to the followers (European
  countries).
• It offers a cleaner environment than for example
  football and cricket for testing the spillover
  hypothesis

7
Data
We do not have any evidence that country data
availability is not as if random Correlation
between availability of data and success in
international competitions is not
significant Dependent variables qualification
for, and final ranking in, Olympic Games and
World Championship
8
Empirical Analysis

• We investigate empirically the determinants of
  the success of European national basketball
  teams.
• Two different dimensions of performance of
  national teams are considered qualification and
  final position for a tournament.
• The presence of endogenous sample selection may
  result in inconsistent estimates of the
  coefficients in a model that accounts of
  tournament rankings
• Based on this premise
• We first estimate a probit for qualifying for a
  certain tournament.
• We use the Mills ratios to correct the OLS
  estimates of the performance equation.

9
Empirical Analysis
World competitions. Performance equation


New country

-
1.04

(2.07)

Host

0.60

(2.14)


Youth

1.13

(2.02)

Per capita GDP

0.0001

(0.0001)

-
9
Population

5.33x10


-
8
(2.34 x10
)



Euroleague

-
3.59

(1.62)



Draft

0.42

(0.42)

Foreign players


-
0.30

(0.16)



Constant Mills ratio -3.25
(1.09)

10.53

(3.07)




10
Empirical Analysis
World competitions. Selection equation
11
CONCLUSIONS

• Spillover hypothesis supported
• Countries with more open policy on recruitment of
  foreign players perform better internationally
• Expectation is that this will hold in other
  teamwork settings such as management consultancy
  and opera
• It should work in other sports as well but will
  not necessarily improve national team performance
  in settings where the host nation is also
  training its rivals players