Wage Discrimination in the NBA: Evidence Using Free Agent Signings
27 Pages Posted: 7 Nov 2018
Date Written: October 31, 2018
There are multiple papers that study wage discrimination within the National basketball Association (NBA) in the 1980s and 1990s against black athletes. This paper revisits the topic to determine if the effects found previously are still prominent in recent NBA history using nearly 800 free agent signings from 2011-2017. Our data set using only free agency signings allows us to control for the effects of performance and player, coach, general manager, and team characteristics on player's wages, which presented a data limitation of the previous literature. Using the Oaxaca-Blinder decomposition and weighted linear regression models, we find that black athletes are underpaid relative to their counterparts. We find that 72.7% of the wage gap found is explained by racial discrimination in our preferred specification. Black players receive on average 20.5% less than their counterparts, all else equal. Moreover, we investigate different sources of discrimination in this labor market. Weighted quantile regressions show evidence of consumer discrimination in that black players with high audience visibility (role and star players) experience a larger racial wage gap. The size of the share of the white population is shown to be positively correlated with the racial wage gap. No employee nor employer discrimination is found.
Keywords: Wage Discrimination, NBA, Free Agents, Labor Market
JEL Classification: J71, L83
Suggested Citation: Suggested Citation