Academic journal article Atlantic Economic Journal

A Determination of Professional Basketball Salaries Based on Performance and Race

Academic journal article Atlantic Economic Journal

A Determination of Professional Basketball Salaries Based on Performance and Race

Article excerpt

Lawrence Kahn and Peter Scherer [Journal of Labor Economics, 1988] found that African Americans in the National Basketball Association were paid significantly less than comparably performing white players. Does the evidence still indicate that race is a significant factor in basketball salaries?

Use equation (1) to estimate 1997 basketball player salaries for all players in the league. Due to data limitations, the final data set had 287 observations:

Sal = f (Sallag, Exp, Ppg, PS, Race, RMSU, % Wins, dc). (1)

Sal represents the 1997 basketball salary for each player; Sallag is salary lagged by one year; Exp is experience; Ppg gives the points per game for each player which is the generalized skills variable; PS is the position-specific skills variable; Race is a 0, 1 dummy variable representing whether the player is an African American; RMSU is a demand proxy with the Rand McNally sales units for the relevant metropolitan statistical area; % Wins is the measure of the winning percentage for the team; and dc is the draft choice number for the athlete. The authors rely on their previous work for the PS variable: assists per game for the guards, defensive rebounds for the forwards, and blocks per game for the centers. …

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