Bonuses and Biases in Japanese Baseball

24 Pages Posted: 27 Aug 2007

See all articles by J. Mark Ramseyer

J. Mark Ramseyer

Harvard Law School

Minoru Nakazato

University of Tokyo - Faculty of Law

Date Written: 2007

Abstract

Do workers earn their market wage under multi-year incompletely specificied contracts? Or do employers use their monopsony power in later years to hold wages down? We use pay and performance data from Japanese baseball to compare the salaries players receive before and after turning free agents. Although teams do pay lower salaries (performance levels held constant) during the early years of a player's contract term, they do so largely to recoup the training and sign-on bonus they provide. Once they recover that training and bonus, they pay salaries close to free agent levels - even before a player becomes a free agent. Additionally, we find that the younger stars earn high endorsement incomes; that Japanese owners compete for players who offer the same performance characteristics as the players for whom U.S. owners compete; that Japanese teams pay a premium for American players; and that Japanese teams do not pay black players less than white players.

JEL Classification: J44, J71, K17

Suggested Citation

Ramseyer, J. Mark and Nakazato, Minoru, Bonuses and Biases in Japanese Baseball (2007). Harvard Law and Economics Discussion Paper No. 589. Available at SSRN: https://ssrn.com/abstract=1009346 or http://dx.doi.org/10.2139/ssrn.1009346

J. Mark Ramseyer (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)

Minoru Nakazato

University of Tokyo - Faculty of Law ( email )

7-3-1 Hongo Bunkyo-Ku
Tokyo, 113
Japan

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