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 Number of foreign players per team (1986-2007 simple average of European basketball leagues) 1,50 2,00 2,50 3,00 3,50 4,00 4,50 5,00 5,50 6,00 1986198719881989199019911992199319941995199619971998199920002001200220032004200520062007 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. New country - 1.04 (2.07) Host 0.60 (2.14) Youth 1.13 (2.02) Per capita GDP 0.0001 (0.0001) Population 5.33x10 - 9 (2.34 x10 - 8 ) 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)** World competitions. Performance equation Empirical Analysis

10. World competitions. Selection equation Previous participation 1.19 (0.28)*** New Country 0.77 (0.43) Countries in Europe -0.008 (0.03) Euroleague 0.85 (0.42)** Youth 1.70 (0.49)** Foreign players 0.13 (0.05)*** Draft -0.02 (0.24) Per-capita GDP -0.00003 (0.00002) Population 1.02 10 -8 ( 1.02 10 -9 )** Constant -1.92 (0.50)** Observations 274 Censored 235 χ2χ2 24.53 ***

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