Abstract
This paper explores salaries for New York Yankees players during the early 20th century. Thanks to the recent availability of a unique data set, we are able to construct detailed earnings profiles using individual player salaries. Human capital wage estimates suggest that the Yankees’ owners rewarded players on the basis of their contributions to team productivity. Although apparently exploiting their monopsony power, the Yankees’ management set salaries on a systematic, productivity-related, basis. Because of the panel nature of the data, we use fixed-effects regression instead of Ordinary Least Squares regression estimation.
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Notes
Fielding percentages, for instance, tend to differ by position. Third basemen and shortstops tend to have lower fielding percentages than first basemen and outfielders.
We did not use Bill James’ “Win Shares,” because of his reliance on ad hoc adjustments.
Player statistics are from Thorn et al.'s [2001] encyclopedia. We initially included both previous season's statistics and cumulative statistics. The latter proved to be insignificant determinants of salary.
To see whether the deflation and falling income of the 1930s had differing effects from the 1920s, we employed a dummy variable to split the data set into two periods (1919–1930; 1931-onward). The variable was not statistically significant in equations for hitters or for pitchers. We also considered a log-log functional form for both models. Since many of the values for the various statistics have a zero value, converting to logs would force us to drop observations, which we do not view as an acceptable result.
We used a specification including a W-L Pct. squared variable, but this proved unsuccessful in improving the explanatory value. The W-L Pct. and W-L Pct. squared terms were not statistically significant at the 10 percent level. We also tried a model with the ln(Real Total Revenue). This model, too, was inferior to the equation presented in the paper.
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Acknowledgements
The authors wish to thank Claudette Burke, librarian at the National Baseball Hall of Fame. We also thank Jason Bergtold of Kansas State University, and the anonymous referees, for their helpful comments and suggestions.
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Brown, K., Gabriel, P. & Surdam, D. An Inquiry into the Pay Structure of the New York Yankees: 1919–1941. Eastern Econ J 38, 449–459 (2012). https://doi.org/10.1057/eej.2011.23
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DOI: https://doi.org/10.1057/eej.2011.23