Labour Market Effects of Sports Related Public Expenditures
Final Report Abstract
Although the literature analyzing the effects associated with public expenditures on health, education and labor market programs is rich, little is known about related effects of public expenditures in other areas such as sports. This is surprising, given the evidence, that sports participation might improve health, educational and labor market outcomes of individuals and the fact, that policy makers commonly legitimate public expenditures on sports with the explicit objective to foster such effects. We use nationwide micro-level panel data in order to explore whether sports-related public expenditures (SPEs) may affect individual sports participation in general and labor market outcomes in particular. Our setting is Germany, where the total amount of annual SPE is estimated at around €10 billion. Hereof, the largest shares (i.e. about €3-4 billion each) are spent on physical education (P.E.) teachers in schools as well as the construction and maintenance of sports infrastructure. We focus on the latter, since sports infrastructure forms the basis for sports activity across all age groups and recently also became an explicit policy target in order to reduce physical inactivity in society. Because money spent by regional authorities on sports facilities is commonly channeled through local authorities, we focus on the lowest administrative level, that is, municipalities. The expenditure data come from the accounting records of more than 12,000 municipalities in Germany and are matched with meteorological data, information on the socio-economic characteristics of the local population and extensive individual data from a representative panel of German households, i.e. the German Socio-Economic Panel (SOEP). To consider that individuals may not only benefit from the expenditures of their own municipalities but also neighboring ones, we construct a distance-weighted expenditure measure. Since public expenditures are policy variables and individuals may deliberately make location choices based on the availability of sports infrastructure, we follow a selection-on-observables approach and exploit the panel structure of our data to identify the effects of interest. In the first paper, we analyze the effects of SPE on sports participation by semi-parametrically estimating dose-response functions which assess how the effects of SPE alter with different expenditure levels. As a by-product, our paper proposes a potential alternative procedure to assess balancing in the case of a continuous treatment. Overall, we do not find any effects of sports expenditures on the probability to practice sports. This finding is robust across age groups, measuring sports participation at a later point in time, including lagged sports participation and lagged sports expenditures as well as dividing the sample into larger and smaller municipalities. In the second paper, we analyze the effects of SPE on individual labour market outcomes by discretizing our SPE measure and computing the average treatment effects of moving from ‘low’ to ‘medium’ / ‘high’ and from ‘medium’ to ‘high’ SPE levels. All effects are estimated by radius matching on the propensity score. Overall, our results suggest that both women and men living in municipalities with high expenditure levels benefit, exhibiting approximately 7 percent of additional household net income on average. However, this effect is fully captured by earning gains for men rather than women living in the household. These gender differences can also be observed in terms of working time, hourly wage and employments status and appear plausible as additional analyses of gender-specific sports participation habits based on the SOEP-Innovation Sample suggests. At first glance, the findings of both papers seem to be contradictory to some extent. However, it is important to note, that the information on sports participation behavior available in the SOEP is limited: The existing measure of sports participation frequency is quite crude and the survey does not contain any information on the type of sports, the duration or the intensity of exercising. Therefore, it was not possible to directly test the possible effects of SPE on all relevant dimensions of sports participation behavior. In fact, in our second paper we do find some indirect evidence that (SPE induced) improved well-being and health are possible mechanisms that determine how the positive labor market effects for men may unfold.
Publications
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Individual labor market effects of local public expenditures on sports.
Labour Economics, Vol. 70. 2021, 101996.
Pawlowski, T., Steckenleiter, C., Wallrafen, T. & Lechner, M.
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Do local expenditures on sports facilities affect sports participation?
Economic Inquiry, Early View 2023
Steckenleiter, C., Lechner, M., Pawlowski, T. & Schüttoff, U.
