An empirical investigation of wage discrimination in professional basketball

Abstract

Previous research has shown that wage discrimination may exist in National Basketball Association (NBA) player salaries. These studies have shown that African-Americans earned from nine to twenty per cent less than whites when on-court performance is held constant. The authors could find no substantial research that has been done in this area since 1991. The present study re-examines this issue. Using salary data from the 1996-97 season and performance statistics from the 1995-96 season, a log-linear wage equation was estimated, and a Chow Test was performed. Holding all other factors constant, African-American players do not earn less than white players. The most important factors affecting an NBA player's salary are on-court performance, free agency, experience, and the draft status of the player. These results are important since they indicate that wage discrimination based on race appears to have been eliminated from the NBA.

Pay Discrimination, Exit Discrimination or Both? Another Look at an Old Issue Using NBA Data

“…Articles by Dey (1997), Gius and Johnson (1998), and Bodvarsson and Brastow (1999) using data from the late 1980s and 1990s failed to find racial wage discrimination. Hamilton (1997) found evidence of racial pay differences only at the upper end of the 1994-1995 season's salary distribution.…”

Are NBA Fans Becoming Indifferent to Race? Evidence From the 1990s

“…Hoang and Rascher (1999) also found evidence of exit discrimination in the 1980s with White players facing 36% less risk of being cut from a team than did Black players with otherwise similar characteristics. As Kahn (2000) documented, however, data from the early to mid-1990s generally offer much less support for salary discrimination against Blacks in the NBA (see, for example, Bodvarsson & Brastow, 1999;Dey, 1997;Gius & Johnson, 1998;Hamilton, 1997).…”

The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance

“…We defined a player to be overpriced, if a team had paid too much for him, relative to his past performance, and other observable characteristics. To test this alternative explanation, we estimated a wage model of NBA salaries that followed the approach in earlier studies (e.g., Gius & Johnson, 1998;Berri, Brook, & Schmidt, 2007). However, analyzing the wages of more than 1'000 free agent signings, we did not observe any influence of social tie hiring on player wages.…”

“…To test whether the influence on winning percentage was driven by systematic overpayment of tie-hirings rather than by suboptimal fit of players, we estimated a wage model of NBA salaries. Building on prior work in this area (e.g., Gius & Johnson, 1998;Berri et al, 2007), we analyzed the salaries of more than 1'000 free agent signings based on prior performance and player characteristics. As Berri et al (2007) showed that scoring is almost as predictive as any other performance measure that incorporates a wide range of playing statistics, we only included scoring to capture prior performance in a parsimonious way.…”