Home Safe: No-Trade Clauses and Player Salaries in Major League Baseball

Pedace, Roberto; Hall, Curtis M.

doi:10.2139/ssrn.1447537

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Home Safe: No-Trade Clauses and Player Salaries in Major League Baseball

30 Pages Posted: 13 Aug 2009 Last revised: 28 Sep 2011

See all articles by Roberto Pedace

Roberto Pedace

Claremont Colleges, Scripps College - Department of Economics

Curtis M. Hall

Drexel University - Bennett S. LeBow College of Business

Date Written: September 28, 2011

Abstract

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

Pedace, Roberto and Hall, Curtis M., Home Safe: No-Trade Clauses and Player Salaries in Major League Baseball (September 28, 2011). Available at SSRN: https://ssrn.com/abstract=1447537 or http://dx.doi.org/10.2139/ssrn.1447537