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Player Salaries, Player Mobility and the Invariance Principle: Evidence from the National Hockey League

  • Philippe Cyrenne

This paper develops a bargaining model of wages and contract length as applied to a professional sports league. Using data based on the recent Collective Bargaining Agreement between players and owners in the National Hockey League, I examine the effect of restrictions on player contracting on both the mobility and salaries of players over the period 2005-2010. Using a variety of estimators both for player mobility and salary determination, I find some evidence that a player’s free agency status effects both mobility and player salaries, but significantly less than might be expected. A key result is that mobility needs to be taken into account when developing models of wage determination in professional sports.

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Paper provided by The University of Winnipeg, Department of Economics in its series Departmental Working Papers with number 2013-04.

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Length: 38 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:win:winwop:2013-04
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  1. McCormick, Robert E. & Tollison, Robert D., 2001. "Why do black basketball players work more for less money?," Journal of Economic Behavior & Organization, Elsevier, vol. 44(2), pages 201-219, February.
  2. Joel G. Maxcy, 2002. "Rethinking Restrictions On Player Mobility In Major League Baseball," Contemporary Economic Policy, Western Economic Association International, vol. 20(2), pages 145-159, 04.
  3. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December.
  4. Stefan Szymanski, 2000. "A Market Test for Discrimination in the English Professional Soccer Leagues," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 590-603, June.
  5. Cyrenne, Philippe, 2001. "A Quality of Play Model of a Professional Sports League," MPRA Paper 29060, University Library of Munich, Germany.
  6. Christopher F Baum, 2006. "An Introduction to Modern Econometrics using Stata," Stata Press books, StataCorp LP, number imeus, September.
  7. Robert E. Hall & Alan B. Krueger, 2008. "Wage Formation between Newly Hired Workers and Employers: Survey Evidence," Working Papers 1095, Princeton University, Department of Economics, Industrial Relations Section..
  8. Philippe Cyrenne, 2009. "Modelling Professional Sports Leagues: An Industrial Organization Approach," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 34(3), pages 193-215, May.
  9. Lehn, Kenneth, 1982. "Property Rights, Risk Sharing, and Player Disability in Major League Baseball," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 343-66, October.
  10. Nikolay Nenovsky & S. Statev, 2006. "Introduction," Post-Print halshs-00260898, HAL.
  11. Marc Lavoie, 2000. "The Location of Pay Discrimination in the National Hockey League," Journal of Sports Economics, The North American Association of Sports Economists, vol. 1(4), pages 401-411, November.
  12. Gibbons, R. & Murphy, K.J., 1990. "Optimal Incentive Contracts In The Presence Of Career Concerns: Theory And Evidence," Working papers 563, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. M. Ruth & K. Donaghy & P. Kirshen, 2006. "Introduction," Chapters, in: Regional Climate Change and Variability, chapter 1 Edward Elgar Publishing.
  14. Hall, Robert & Krueger, Alan B., 2008. "Wage Formation between Newly Hired Workers and Employers: Survey Evidence," IZA Discussion Papers 3775, Institute for the Study of Labor (IZA).
  15. Marc Lavoie & Gilles Grenier & Serge Coulombe, 1987. "Discrimination and Performance Differentials in the National Hockey League," Canadian Public Policy, University of Toronto Press, vol. 13(4), pages 407-422, December.
  16. Martin Schmidt, 2011. "Institutional Change and Factor Movement in Major League Baseball: An Examination of the Coase Theorem’s Invariance Principle," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 39(3), pages 187-205, November.
  17. Stephen F. Ross, 2003. "Competition Law as a Constraint on Monopolistic Exploitation by Sports Leagues and Clubs," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 569-584, Winter.
  18. Allen R. Sanderson & John J. Siegfried, 2006. "Simon Rottenberg and Baseball, Then and Now: A Fiftieth Anniversary Retrospective," Journal of Political Economy, University of Chicago Press, vol. 114(3), pages 594-623, June.
  19. Joel Maxcy, 2004. "Motivating long-term employment contracts: risk management in major league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 109-120.
  20. Idson, Todd L & Kahane, Leo H, 2000. "Team Effects on Compensation: An Application to Salary Determination in the National Hockey League," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 345-57, April.
  21. repec:pri:indrel:dsp016h440s45s is not listed on IDEAS
  22. Lawrence M. Kahn, 2000. "The Sports Business as a Labor Market Laboratory," Journal of Economic Perspectives, American Economic Association, vol. 14(3), pages 75-94, Summer.
  23. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  24. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
  25. Paul D. Staudohar, 2005. "The Hockey Lockout of 2004-05," IASE Conference Papers 0504, International Association of Sports Economists.
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