Pay Discrimination in the NBA Revisited

By Hill, James Richard | Quarterly Journal of Business and Economics, Winter-Spring 2004 | Go to article overview

Pay Discrimination in the NBA Revisited


Hill, James Richard, Quarterly Journal of Business and Economics


Introduction

The use of the residual method to measure wage discrimination is fraught with problems. Oaxaca (1973) stated:

   If it were possible to control for virtually all sources of
   variation in wages, one could pretty well eliminate labor market
   discrimination as a significant factor in determining wage
   differentials by sex (or race) ... The other extreme is to
   control for virtually nothing and thereby minimize the role of
   productivity differences, [DELTA]Z. This is tantamount to declaring
   at the outset that the two labor inputs are near perfect substitutes
   and thereby attributing virtually all of the observed wage
   differential to labor market discrimination. (p. 699)

Between these two extremes the researcher must find adequate and appropriate proxy variables to measure the productivity of workers as well other market factors that could impact wages. Accomplishment of this task still can lead to an understatement or overstatement of wage discrimination using wage equation residuals. For example, if female or minority workers do not invest as heavily in education or training as a rational market response to a lower rate or return on investment due to market discrimination, then the resulting estimates using the residual methodology understate the overall effect of discrimination on wages. On the other hand, if race or sex is correlated with an omitted variable that helps to explain productivity, then the resulting estimates of wage discrimination overstate wage discrimination or can lead to a false positive conclusion of the existence of wage discrimination.

Labor market studies of wage discrimination in professional sports do not suffer from data shortages. According to Kahn (2000), the plethora of statistics designed to measure the performance of our professional athletes provides a virtual labor market laboratory for analysts. Problems of correlation between race and productivity measures may still present problems.

This study uses panel data over the 1990-2000 seasons to examine for evidence of pay discrimination. (1) Models are estimated using the standard OLS technique and the random effects formulation.

Previous Studies

Kahn and Sherer (1988), using salary data from the 1985-86 season, found evidence that black players, who represented almost 75 percent of team rosters, received approximately 20 percent less in pay, ceteris paribus, compared to white players. The source of this discrimination was suggested to be fans. An article by Brown, Spiro, and Keenan (1991) using 1984-1985 season salary data found similar results, about a 15 percent pay premium for white players; another article by Koch and Vander Hill (1988) using the same salary data as Brown, Spiro, and Keenan (1991) but more dependent variables estimated about a 9 percent pay premium for whites. Both studies also cite fan discrimination as the driving force behind pay discrimination.

Several articles (Dey, 1997; Gius and Johnson, 1998; and Bodvarsson and Brastow, 1999), using salary data from the late 1980s and 1990s failed to find pay discrimination in this more recent time period. Hamilton (1997) found evidence of racial pay differences only at the upper end of the 1994-1995 season's salary distribution. Dey (1997) replicated the regression models of Brown, Spiro, and Keenan (1991) for each year of the period 1987-1993 as well as a pooled sample. In two of the years and in the pooled sample there was a premium for white players, but this premium disappeared when a dummy variable for centers was added to the model. Dey (1997) concludes that the salary premium for whites reported by Brown, Spiro, and Keenan (1991) may actually be a pay premium for centers because they were more likely to be white. Kahn and Sherer (1988) did have position dummy variables for center and forward, however, and still found pay discrimination.

Bodvarsson and Brastow (1999) found evidence to suggest that the disappearance of the pay discrimination was the result of a decrease in owner monopsony due to the negotiation of a new NBA collective bargaining agreement between the owners and players in 1988 combined with the addition of four new teams. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Pay Discrimination in the NBA Revisited
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.