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RISK PREFERENCES AND WAGE DETERMINATION IN THE MAJOR LEAGUE BASEBALL LABOR MARKET

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SrThesis_2013_kswhitak_attempt_2013-04-15-13-25-21_Whitaker_Kevin.pdf (1.51 MB)

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2013-07-09

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Walk-in Access. This thesis can only be viewed on computer terminals at the <a href=http://mudd.princeton.edu>Mudd Manuscript Library</a>.

Abstract

There have been few empirical analyses of firms’ risk preferences with respect to labor, largely because the necessary information is not available in many industries. In this study, a model of salary determination in Major League Baseball is developed and used to measure the risk preferences of employers. Using a sample of 1,599 contracts signed from 1993 to 2012, MLB teams are found to be risk-seeking in labor, but only for short-term contracts; in contracts spanning more than one year, teams show no significant risk preference. This pattern is consistent with a new theory of wage determination, in which firms prefer risky workers while risky workers prefer long-term income security.

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Princeton University Senior Theses

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http://arks.princeton.edu/ark:/88435/dsp01xs55mc153
 https://theses-dissertations.princeton.edu/handle/88435/dsp01xs55mc153

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Economics, 1927-2026