REDUCING ASYMMETRIC INFORMATION: EMPIRICAL EVIDENCE FROM MAJOR LEAGUE BASEBALL
1 online resource (48 pages) : PDF
University of North Carolina at Charlotte
This paper estimates the effect wage transparency had on Major League Baseballpitcher’s salaries in the mid to late 1980s. The paper implements a conventionalmethod of wage estimation as previously used in the literature. The data, in partare from a new dataset of players’ salaries, which includes salaries from the pre-1985period. The results show that on average, Major League Baseball pitchers’ salariesincrease by 48.3% over the 1984 level after transparency. However, in 1986 the salariesdecline to 30.3% over the 1984 level, a 18% decline compared to 1985. The paperdiscusses some possible reasons why there was a decline in 1986. One such explanationis that the momentum of upward pressure on wages made the average wage overshootthe equilibrium wage by 18%. Conversely, the period of owner-to-owner collusion isbelieved to have taken place during 1985, 1986, and the 1987 seasons, which likely putdownward pressure on wages during that period. To adjust for collusion, the paperinterpolates damages awarded by the courts in 1990 for collusion and estimates thecollusion adjusted transparency effect to be 51.3%
BASEBALL ECONOMICSMAJOR LEAGUE BASEBALL COLLUSIONMAJOR LEAGUE BASEBALL SALARIESPITCHER SALARIESREDUCING ASYMMETRIC INFORMATIONWAGE TRANSPARENCY
Zillante, ArthurAmato, Louis
Thesis (M.S.)--University of North Carolina at Charlotte, 2017.
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