The impact of cultural distance on salary: the case of Samurai Japan

Wen-jhan Jane

Eurasian Economic Review, 2021, vol. 11, issue 1, No 4, 85-123

Abstract: Abstract This article focuses on the issues of nationality and cross-cultural differences in relation to compensation levels in the Nippon Professional Baseball (NPB) league. Panel data for 1,520 players during the period from 2009 to 2017 were collected, and the two-stage double fixed-effects model was employed to investigate the impact of nationality discrimination and cultural distance on salary. The main finding indicated that, on average, foreign players are paid 0.74–0.95% more than domestic players ceteris paribus. Moreover, foreign players with higher cultural (0.19%) and special (0.053%) distances fare better relative to those where such distance is lower. Evidence is found of nationality-based salary discrimination and the effects of cultural distance on salary. We also find strong support for the senior-junior system that pervades the culture in the Japanese labor market and the different body mass index (BMI) requirements for pitchers and hitters in NPB.

Keywords: Culture; Hofstede; Nippon professional baseball; Reservation salary; Salary discrimination (search for similar items in EconPapers)
JEL-codes: J31 J71 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s40822-020-00157-y

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