SPE

Labour Market Effects of Sports Related Public Expenditures

16/04/2016 to 31/01/2019

Each year governments around the globe spend a considerable amount of money to foster elite sports as well as amateur and leisure sports. Like other public expenses, sports related public expenditures (SPE) are commonly justified by the existence of market failures and public as well as merit good characteristics. For instance, it is argued that sports participation is associated with a reduction of health care costs through increased mental and physical well-being as well as with the accumulation of social and human capital. However, and in contrast to the widespread belief in these links, convincing empirical evidence is scarce. This project is the first that tries to shed light on the causal relations between SPE, sports participation and its supposed beneficial effects. Since many of the effects (such as improved health and individual well-being) are closely linked to individual labour market success, labour market outcomes are considered to be a comprehensive and a highly policy relevant measure to proxy these effects. By using German panel data on annual SPE at the municipality level as well as sports participation and labour market outcomes at the individual level and employing matching estimators, we try to disentangle the direct and indirect effects of SPE on individual labour market outcomes. Since there may be several factors that confound these relationships, a thorough identification strategy is developed that will under certain assumptions that are arguably plausible in our context allow us to uncover causal relations.