Wage Penalties in Major League Baseball

This study examines discrimination both by race and by foreign-born status in the context of Major League Baseball (MLB). The goal of this study is to determine if employer-based discrimination is present in MLB by looking for average differences in wages amongst groups and by looking for differences in returns to on-field output for players of different groups. MLB is an interesting industry to look for evidence of discrimination because it is one of the few industries where employee output is clear to see and compensation information is widely available, which is unusual for labor market studies. Sports is an interesting laboratory for economic ideas because even though the players make up a small percentage of people in America and earn substantially more than the average person, sports in America are thought of as capturing the ideals of America where hard work and dedication are rewarded (Kahn 2000)