IDEAS home Printed from https://ideas.repec.org/a/sae/jospec/v20y2019i8p1066-1087.html
   My bibliography  Save this article

Quantile Insights on Market Structure and Worker Salaries: The Case of Major League Baseball

Author

Listed:
  • Rodney Fort
  • Young Hoon Lee
  • Taeyeon Oh

Abstract

The vast majority of the empirical investigation of player marginal revenue product (MRP) and monopsony exploitation rates (MER) implicitly assumed that MRP is constant across the revenue distribution of teams. The few works that do attempt to capture the impact of revenue variation across teams do so via independent variable specification. We bring quantile estimation to bear that allows MRP to vary across the entire revenue distribution in Major League Baseball. Completely in keeping with economic common sense, MRP increases as total revenue rises (to higher and higher quantiles). As with past findings, there is interesting MER dispersion over the length of player tenure in the league and between star and mediocre players. Heretofore unexplored, we also find interesting dispersion in MRP and MER between larger revenue and smaller revenue markets. Our results suggest that independent variable specifications overstate MRP and MER for smaller revenue teams and understate the same for larger revenue team.

Suggested Citation

  • Rodney Fort & Young Hoon Lee & Taeyeon Oh, 2019. "Quantile Insights on Market Structure and Worker Salaries: The Case of Major League Baseball," Journal of Sports Economics, , vol. 20(8), pages 1066-1087, December.
    • Handle: RePEc:sae:jospec:v:20:y:2019:i:8:p:1066-1087
    DOI: 10.1177/1527002519851152
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/1527002519851152
    Download Restriction: no
    File URL: https://libkey.io/10.1177/1527002519851152?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nancy J. Burnett & Lee James Van Scyoc, 2015. "Compensation Discrimination for Defensive Players," Journal of Sports Economics, , vol. 16(4), pages 375-389, May.
    2. Rockerbie, Duane W, 2010. "Marginal revenue product and salaries: Moneyball redux," MPRA Paper 21410, University Library of Munich, Germany.
    3. Krautmann, Anthony C, 1999. "What's Wrong with Scully-Estimates of a Player's Marginal Revenue Product," Economic Inquiry, Western Economic Association International, vol. 37(2), pages 369-381, April.
    4. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    5. AC. Krautmann & E. Gustafson & L. Hadley, 2000. "Who pays for minor league training costs?," Contemporary Economic Policy, Western Economic Association International, vol. 18(1), pages 37-47, January.
    6. John Charles Bradbury, 2013. "What Is Right With Scully Estimates of a Player’s Marginal Revenue Product," Journal of Sports Economics, , vol. 14(1), pages 87-96, February.
    7. John D. Burger & Stephen J. K. Walters, 2008. "The Existence and Persistence of a Winner's Curse: New Evidence from the (Baseball) Field," Southern Economic Journal, John Wiley & Sons, vol. 75(1), pages 232-245, July.
    8. John Burger & Stephen Walters, 2008. "Testing Fair Wage Theory," Journal of Labor Research, Springer, vol. 29(4), pages 318-332, December.
      • John D. Burger & Stephen J.K. Walters, 2006. "Testing Fair Wage Theory," Working Papers 0623, International Association of Sports Economists;North American Association of Sports Economists.
    9. Anthony C. Krautmann, 2013. "What Is Right With Scully Estimates of a Player’s Marginal Revenue Product," Journal of Sports Economics, , vol. 14(1), pages 97-105, February.
    10. Roger Koenker & Kevin F. Hallock, 2001. "Quantile Regression," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 143-156, Fall.
    11. Roger D. Blair & Brad R. Humphreys & Hyunwoong Pyun, 2017. "Monopsony Exploitation in Professional Sport: Evidence from Major League Baseball Position Players, 2000–2011," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(5), pages 676-688, July.
    12. Jahn K. Hakes & Raymond D. Sauer, 2006. "An Economic Evaluation of the Moneyball Hypothesis," Journal of Economic Perspectives, American Economic Association, vol. 20(3), pages 173-186, Summer.
    13. John L. Solow & Anthony C. Krautmann, 2011. "A Nash Bargaining Model of the Salaries of Elite Free Agents," Journal of Sports Economics, , vol. 12(3), pages 309-316, June.
    14. Young Lee, 2011. "Is the small-ball strategy effective in winning games? A stochastic frontier production approach," Journal of Productivity Analysis, Springer, vol. 35(1), pages 51-59, February.
    15. Michael A. Leeds & Sandra Kowalewski, 2001. "Winner Take All in the NFL," Journal of Sports Economics, , vol. 2(3), pages 244-256, August.
    16. Young H. Lee & Trenton G. Smith, 2008. "Why Are Americans Addicted To Baseball? An Empirical Analysis Of Fandom In Korea And The United States," Contemporary Economic Policy, Western Economic Association International, vol. 26(1), pages 32-48, January.
    17. John D. Burger & Stephen J. K. Walters, 2003. "Market Size, Pay, and Performance," Journal of Sports Economics, , vol. 4(2), pages 108-125, May.
    18. Claude Vincent & Byron Eastman, 2009. "Determinants of Pay in the NHL," Journal of Sports Economics, , vol. 10(3), pages 256-277, June.
    19. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    20. Barton Hughes Hamilton, 1997. "Racial discrimination and professional basketball salaries in the 1990s," Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 287-296.
    21. Robert Brown, 2012. "Do NFL Player Earnings Compensate for Monopsony Exploitation in College?," Journal of Sports Economics, , vol. 13(4), pages 393-405, August.
    22. Marc Poitras, 2006. "Do New Major League Ballparks Pay for Themselves?," The Journal of Business, University of Chicago Press, vol. 79(5), pages 2275-2300, September.
    23. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
    24. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jin Lee & Young Hoon Lee, 2021. "Development of a Win Production Function and Evaluation of Cross-Sectional Dependence," Journal of Sports Economics, , vol. 22(4), pages 412-431, May.
    2. Brian M. Mills & Rodney Fort, 2023. "Performance Quality Preference Heterogeneity in Major League Baseball," Journal of Sports Economics, , vol. 24(3), pages 352-373, April.
    3. Roman Vavrek, 2021. "An Analysis of Usage of a Multi-Criteria Approach in an Athlete Evaluation: An Evidence of NHL Attackers," Mathematics, MDPI, vol. 9(12), pages 1-22, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roger D. Blair & Brad R. Humphreys & Hyunwoong Pyun, 2017. "Monopsony Exploitation in Professional Sport: Evidence from Major League Baseball Position Players, 2000–2011," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(5), pages 676-688, July.
    2. Holmes, Paul, 2011. "New evidence of salary discrimination in major league baseball," Labour Economics, Elsevier, vol. 18(3), pages 320-331, June.
    3. Terry, Ryan P. & McGee, Jeffrey E. & Kass, Malcolm J., 2018. "The not-so-free agent: Non-performance factors that contribute to free agent compensation premiums," Sport Management Review, Elsevier, vol. 21(2), pages 189-201.
    4. Jin Lee & Young Hoon Lee, 2021. "Development of a Win Production Function and Evaluation of Cross-Sectional Dependence," Journal of Sports Economics, , vol. 22(4), pages 412-431, May.
    5. Anthony C. Krautmann, 2013. "What Is Right With Scully Estimates of a Player’s Marginal Revenue Product," Journal of Sports Economics, , vol. 14(1), pages 97-105, February.
    6. R Simmons & D Berri, 2007. "Does it pay to specialize? The story from the Gridiron," Working Papers 591134, Lancaster University Management School, Economics Department.
    7. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    8. Lisa A. Giddings & Michael Haupert, 2019. "Earning Like a Woman: Salaries versus Marginal Revenue Products in the AAGBPL and MLB: 1947-1952," Journal of Sports Economics, , vol. 20(2), pages 198-217, February.
    9. Rockerbie, Duane & Easton, Stephen, 2019. "A Real Options Approach to Multi-Year Contracts in Professional Sports," MPRA Paper 93062, University Library of Munich, Germany.
    10. Peter K. Hunsberger & Seth R. Gitter, 2015. "What is a Blue Chip Recruit Worth? Estimating the Marginal Revenue Product of College Football Quarterbacks," Journal of Sports Economics, , vol. 16(6), pages 664-690, August.
    11. Joshua M. Congdon-Hohman & Jonathan A. Lanning, 2018. "Beyond Moneyball," Journal of Sports Economics, , vol. 19(7), pages 1046-1061, October.
    12. Carlo Bellavite Pellegrini & Raul Caruso & Marco Di Domizio, 2021. "Relative wages, payroll structure and performance in soccer. Evidence from Italian Serie A (2007-2019)," DISCE - Quaderni del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    13. Haupert, Michael & Murray, James, 2011. "Regime Switching and Wages in Major League Baseball under the Reserve Clause," MPRA Paper 29094, University Library of Munich, Germany.
    14. Marco Di Domizio & Carlo Bellavite Pellegrini & Raul Caruso, 2022. "Payroll dispersion and performance in soccer: A seasonal perspective analysis for Italian Serie A (2007–2021)," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 513-525, July.
    15. Stephen J. K. Walters & Peter Allmen & Anthony Krautmann, 2017. "Risk Aversion and Wages: Evidence from the Baseball Labor Market," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(3), pages 385-397, September.
    16. John Charles Bradbury, 2013. "What Is Right With Scully Estimates of a Player’s Marginal Revenue Product," Journal of Sports Economics, , vol. 14(1), pages 87-96, February.
    17. Anthony C. Krautmann, 2018. "Contract Extensions," Journal of Sports Economics, , vol. 19(3), pages 299-314, April.
    18. Michael A. Roach, 2018. "Testing Labor Market Efficiency Across Position Groups in the NFL," Journal of Sports Economics, , vol. 19(8), pages 1093-1121, December.
    19. David J. Berri & John Charles Bradbury, 2010. "Working in the Land of the Metricians," Journal of Sports Economics, , vol. 11(1), pages 29-47, February.
    20. Bill Gerrard, 2014. "Achieving transactional efficiency in professional team sports: the theory and practice of player valuation," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 12, pages 189-202, Edward Elgar Publishing.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jospec:v:20:y:2019:i:8:p:1066-1087. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.