Premium
Testing the Determinants of Income Distribution in Major League Baseball
Author(s) -
Jewell R. Todd,
McPherson Michael A.,
Molina David J.
Publication year - 2004
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1093/ei/cbh074
Subject(s) - payroll , league , salary , economics , gini coefficient , panel data , econometrics , distribution (mathematics) , income distribution , nonparametric statistics , inequality , economic inequality , demographic economics , mathematics , accounting , mathematical analysis , physics , market economy , astronomy
Using data from U.S. Major League Baseball, this article compares parametric and nonparametric Gini coefficients for each team and year. We employ a panel‐data model to investigate the time‐series and cross‐sectional factors affecting the Gini coefficients and the parameters of the preselected distribution. We find that much of within‐team income distribution is determined by time‐related variables, with the 1994 MLB strike having an especially strong effect. A team's market potential does not seem to affect its salary distribution, but the average age of the players on a team's roster does. Furthermore, inequality first increases with team payroll, then decreases before increasing again.