Home Safe: No-Trade Clauses and Player Salaries in Major League Baseball
30 Pages Posted: 13 Aug 2009 Last revised: 28 Sep 2011
Date Written: September 28, 2011
In this paper, we examine the wage effects of no-trade clauses in Major League Baseball. Using an accepted player salary equation and data from the 2003-2008 seasons, we find evidence that there is a trade-off between monetary compensation and the risk reduction provided by a no-trade clause. The results suggest that players may be able to simultaneously negotiate for a no-trade clause and higher salaries, but this is constrained when players also seek to guarantee their income stream with long-term contracts.
Keywords: wage differential, non-monetary benefits, no-trade clause, performance and compensation
JEL Classification: J31, J44, M55
Suggested Citation: Suggested Citation