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Player salary share and the distribution of player earnings

Author

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  • Gerald W. Scully

    (The University of Texas at Dallas, 27872 Camino Del Rio, San Juan Capistrano, CA 92675, USA)

Abstract

Veteran free agency in professional team sports has led to higher average player compensation, an increase in the share of league revenues going to players, and increased dispersion in player earnings. Tests on the distributions of player salaries in the last decade reject that they are the same in the early and later years. The variance in baseball player compensation is decomposed into share and marginal revenue product effects for 1990 and 1998, and it is found that both effects contributed to the increased variance in player salaries. A simulation of the effect of universal free agency in baseball suggests a modest increase in player salary share and a drop in compensation inequality among players. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Gerald W. Scully, 2004. "Player salary share and the distribution of player earnings," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 77-86.
  • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:2:p:77-86
    DOI: 10.1002/mde.1110
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    File URL: http://hdl.handle.net/10.1002/mde.1110
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    References listed on IDEAS

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    1. Sandstrom, Arne & Wretman, Jan H & Walden, Bertil, 1988. "Variance Estimators of the Gini Coefficient--Probability Sampling," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(1), pages 113-119, January.
    2. Ogwang, Tomson, 2000. " A Convenient Method of Computing the Gini Index and Its Standard Error," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(1), pages 123-129, February.
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    Cited by:

    1. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    2. Pedro Garcia-del-Barrio & Francesc Pujol, 2009. "The Rationality of Under-employing the Best-performing Soccer Players," LABOUR, CEIS, vol. 23(3), pages 397-419, September.
    3. Pedro Garcia-del-Barrio & Francesc Pujol, 2007. "Hidden monopsony rents in winner-take-all markets-sport and economic contribution of Spanish soccer players," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 57-70.
    4. Pelnar, Gregory, 2007. "Antitrust Analysis of Sports Leagues," MPRA Paper 5382, University Library of Munich, Germany.
    5. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0039, University of Zurich, Center for Research in Sports Administration (CRSA).

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