A test of employer discrimination in the NBA

This paper presents a test of an important implication of Becker's theory o f employer discrimination: when institutional change enhances labor mobilit y, employer discrimination falls because it becomes more costly for employe rs to indulge tastes for discrimination. The test case is the National Bask etball Association (NBA). This paper specifically addresses the following q uestion about the NBA: why did black/white player salary differentials vani sh by the early 199os? Previous studies claim that NEA wage gaps in the 198 0s are attributable to customer discrimination and monopsonistic wage discr imination. This study argues that employer discrimination was an important source of those gaps and that one! reason they vanished was because reduced monopsony power eradicated employer discrimination. Monopsony power fell b ecause the 1988 NEA Collective Ba, gaining Agreement and the entry of four new teams in the league enhanced player mobility and increased the amount o f labor market competition. Using data for the 1985-86 and 1990-91 seasons, employer discrimination was proxied by the race of the team's general mana ger. Empirical results strongly suggest that a major reason the NEA wage ga p vanished in the later period was because of a reduction in employers' abi lity to discriminate. This is in contrast to earlier literature on the NEA, which has tended to emphasize the role of customer discrimination.