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A Test Of Employer Discrimination In The Nba

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  • ÖRN B. BODVARSSON
  • RAYMOND T. BRASTOW

Abstract

This paper presents a test of an important implication of Becker's theory of employer discrimination: when institutional change enhances labor mobility, employer discrimination falls because it becomes more costly for employers to indulge tastes for discrimination. The test case is the National Basketball Association (NBA). This paper specifically addresses the following question about the NBA: why did black/white player salary differentials vanish by the early 1990s? Previous studies claim that NBA wage gaps in the 1980s are attributable to customer discrimination and monopsonistic wage discrimination. This study argues that employer discrimination was an important source of those gaps and that one reason they vanished was because reduced monopsony power eradicated employer discrimination. Monopsony power fell because the 1988 NBA Collective Bargaining Agreement and the entry of four new teams in the league enhanced player mobility and increased the amount of labor market competition. Using data for the 1985‐86 and 1990‐91 seasons, employer discrimination was proxied by the race of the team's general manager. Empirical results strongly suggest that a major reason the NBA wage gap vanished in the later period was because of a reduction in employers' ability to discriminate. This is in contrast to earlier literature on the NBA, which has tended to emphasize the role of customer discrimination. (JEL J71)

Suggested Citation

  • Örn B. Bodvarsson & Raymond T. Brastow, 1999. "A Test Of Employer Discrimination In The Nba," Contemporary Economic Policy, Western Economic Association International, vol. 17(2), pages 243-255, April.
    • Handle: RePEc:bla:coecpo:v:17:y:1999:i:2:p:243-255
    DOI: 10.1111/j.1465-7287.1999.tb00679.x
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    References listed on IDEAS

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    1. Bodvarsson, Orn B & Brastow, Raymond T, 1998. "Do Employers Pay for Consistent Performance?: Evidence from the NBA," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 145-160, January.
    2. Donald J. Cymrot, 1985. "Does Competition Lessen Discrimination? Some Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 605-612.
    3. Kahn, Lawrence M & Sherer, Peter D, 1988. "Racial Differences in Professional Basketball Players' Compensation," Journal of Labor Economics, University of Chicago Press, vol. 6(1), pages 40-61, January.
    4. Orley Ashenfelter & Timothy Hannan, 1986. "Sex Discrimination and Product Market Competition: The Case of the Banking Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(1), pages 149-173.
    5. Barton Hughes Hamilton, 1997. "Racial discrimination and professional basketball salaries in the 1990s," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 287-296.
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    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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