Discrimination in Retention Decisions and Its Impact on Career Earnings. Evidence from the National Football League

Ian Gregory-Smith (), Alex Bryson () and Rafael Gomez ()
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Ian Gregory-Smith: University of Sheffield
Alex Bryson: University College London
Rafael Gomez: University of Toronto

No 18079, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We examine the role that racial discrimination plays in the decision to retain or release an employee. Our empirical setting allows us to separate the retention decision from the wage decision. For the first four years of a player’s career, wages are mechanically determined and players are under a restricted ‘rookie’ contract, during which they can be released without cost. Players who survive in the league beyond four years receive a large uptick in their remuneration upon signing their first ‘free-agency’ contract. Consequently, marginal decisions over employment retention during the rookie contract have substantial implications for earnings realised over a player’s career. We find subtle but significant differences in retention rates between Black and White players (approximately 3 percentage points) that can’t be explained by a comprehensive set of individual characteristics including their productivity. We also show that traditional wage gap estimates, which appear to show equal earnings between Black and White players conditional upon playing position and productivity, mask underlying disparities in career earnings that become apparent when adjusting for these unequal retention rates.

Keywords: retention; wages; discrimination (search for similar items in EconPapers)
JEL-codes: J31 J71 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-hrm and nep-spo
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