Does Increasing Salary Discrimination in the NBA Reflect Disparity of Fans' Purchasing Power?

Hisahiro Naito and Yu Takagi

Tsukuba Economics Working Papers from Faculty of Humanities and Social Sciences, University of Tsukuba

Abstract: From the late 2000s, racial salary discrimination against black players emerged in the National Basketball Association (NBA) league. At the same time in the United States, the income gap between white and black citizens, which had been decreasing in the previous 20 years, stalled in the mid-2000s and started to increase again from the late 2000s. In this study, we examine whether increasing racial salary discrimination against black players in the NBA is a reflection of the non-shrinking disparity of purchasing power of white and black citizens. Using census data, we calculate the median income ratio of white and black males in each metropolitan area where at least one NBA team is located. Then, we examine whether the white premium of the salary of an NBA player is correlated with the median income ratio between white and black citizens of the metropolitan area where the player's team is located. We find that the white premium becomes higher in a metropolitan area where the median income gap is smaller. This suggests that the non-shrinking income gap between white and black citizens is not the cause of increasing salary discrimination against black players in the NBA in the late 2000s and 2010s.

Date: 2016-06
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