A Rising Tide Raises all Boats: The changing distribution of salaries in the NBA over time

Mark C. Strazicich, Peter A. Groothuis and Tiberiu S.V Ungureanu

No 24-20, Working Papers from Department of Economics, Appalachian State University

Abstract: : We examine the evolution of salary distribution in the National Basketball Association (NBA) over 33 years, using a panel of all players earning above the rookie minimum scale. We identify three distinct eras of salary dynamics by applying time series structural break analysis, with breaks aligned to key changes in NBA Collective Bargaining Agreements. Our findings show that while real salaries have risen substantially across all income levels, inequality has grown, particularly among the highest earners. Analyzing the Lorenz curve and Gini coefficient, we observe a period of increasing inequality during the 1990s, followed by a brief shift toward more equitable salary distribution in the early 2000s and a return to rising inequality in recent years. These insights reveal the complex interplay between union negotiations, league revenues, and market forces, offering a deeper understanding of how CBA policies have shaped salary distribution in professional sports. Key Words: : Unions, Collective Bargaining Agreement, NBA, Structural Breaks Analysis

JEL-codes: L83 Z22 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-his and nep-spo
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