| dc.description.abstract | With the society transformation and technology progress, the importance of leisure activities has become greater in today’s modern society. Among those leisure activities, professional sports have followed this trend and accumulate many fans around the globe. Thanks to fans’ enthusiasm, many detailed statistics of professional teams and players are recorded. Furthermore, these statistics have also been used by economists to examine many economic theories. In this dissertation, I adopt data from professional sports to study three issues in labor economics, contract theory, and management of enterprises, respectively.
In chapter 2, I collect the panel data that consists of MLB pitchers’ salary information and their on-field performance from 2002 to 2011, in order to investigate an important issue in labor economics—the correlation between labor handedness and their salaries. According to my results, there are no salary differences between left-handed pitchers and right-handed pitchers. The possible reason is that, based on the characteristics of baseball, left-handed pitchers have advantages only when facing left-handed batters. Right-handed hitters, conversely, give disadvantages to these southpaws. Provided that majority of batters are right-handed in MLB, the tactical advantage enjoyed by left-handers in interactive sports is not significant for left-handed pitchers. Therefore, tactical advantages of left-handers cannot offer left-handed pitchers any salary premium. Moreover, when further separating pitchers into three types: starters, relievers, and closers, there is still no salary premium being discovered on left-handed pitchers within any types of pitchers. These results suggest that handedness does not matter to pitchers’ salaries. How many salaries a pitcher can obtain is mainly determined from his on-field performance.
In chapter 3, the focus is turned to examine how uncertainty and specific human capital affect the negotiated contract length. In the field of contract theory, there has been no consensus being reached on the relationship between uncertainty and contract duration. Moreover, there is no study investigating the effects of specific human investment on contract length. Therefore, I gather MLB batters’ contract information from 2003 to 2011 to conduct the research. Using the unobservable portion of batters’ on-field performance as a proxy for production uncertainty, I find that contract duration is positively related to uncertainty. This result supports the risk-sharing hypothesis, suggesting that labor contracts which are designed to protect workers can effectively reduce their risks. On the other hand, catchers, compared to other position players, devote more human specific capital to their teams. Therefore, I use catcher as a proxy for specific investment. My results reveal that labors who devote more specific human capital will obtain longer contract duration so as to prevent opportunistic behavior from happening.
Finally, according to the characteristics of professional sports teams’ operation, chapter 4 evaluates the efficiency of teams in the National Basketball Association (NBA) and provides suggestions for team executives. Generally, a team’s production structure can be divided into two stages. The first stage transforms salaries into players’ performance; the second stage combines player performance to generate wins and revenues. Under this assumption, I apply the additive efficiency decomposition in two-stage DEA to separate team efficiency into first-stage wage efficiency, second-stage on-court efficiency, and endogenously find out the individual weights for each stage. The empirical results show that NBA teams perform better in first stage than in the second stage. Moreover, NBA teams, on average, tend to possess a higher weight in the first stage, suggesting that team executives can enhance team efficiency more efficaciously by prudentially recruiting players.
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