Does Salary Discrimination Persist for Foreign Athletes in the NBA?

Abstract

This study empirically examines Becker’s (1971) wage discrimination theory using foreign-born national basketball association (NBA) players. Despite the rapid growth in the NBA, particularly in foreign markets, existing literature suggests that foreign-born players continue to be underpaid relative to players born in the U.S. Becker’s theory predicts that over time, wage discriminators will be priced out of the market and that wages will eventually equilibrate. This study uses the most recent data, from the 2010-2011 NBA season to test if foreign-born discrimination persists. The empirical results from this study reveal that not only have wages for foreign players caught up to the wages of their American counterparts, but foreign-born players received an average wage premium of approximately $900,000.

Keywords: basketball, wage discrimination, foreign born, NBA, marginal product of labor

JEL Classification: L8, J31, J42