A Rising Tide Raises all Boats: The Changing Distribution of Salaries in the NBA Over Time

Abstract

We examine the evolution of salary distribution in the National Basketball Association using a panel of all full-time players. We identify three eras using structural break analysis, with breaks aligned to changes in Collective Bargaining Agreements that occurred at the time of lockouts. Our findings show that real salaries have risen substantially across all income levels but not at the same rate. Analyzing the Lorenz curve and Gini coefficient, we observe a period of increasing inequality during the 1990s, followed by a more equitable salary distribution in the early 2000s, and then a return to rising inequality in recent years.

Keywords

collective bargaining income distribution gini coefficient lorenz curve and structural breaks

Get full access to this article

View all access options for this article.

References

Black

D. A.

Parker

D. F.

(1985). The division of union rents. Journal of Labor Research, 6(3), 281–288. https://doi.org/10.1007/BF02685411

Blanchflower

D. G.

Bryson

(2004). The union wage premium in the US and the UK. [CEP discussion paper: no. 612]. Centre for Economic Performance London School of Economics and Political Science. Retrieved from https://eprints.lse.ac.uk/19987/

Bloomberg. (2014, October 6). Walt Disney, Time Warner Said to Renew NBA TV Contracts. Retrieved from https://www.bloomberg.com/news/articles/2014-10-06/disney-time-warner-are-said-to-renew-tv-contracts-for-nba-games?embedded-checkout=true

Budd

J. W.

I-G

(2000). The union membership wage premium for employees covered by collective bargaining agreements. Journal of Labor Economics, 18(4), 783–807. https://doi.org/10.1086/209977

Depken

C. A.

Groothuis

P. A.

Strazicich

M. C.

(2020). Evolution of community deterrence: Evidence from the National Hockey League. Contemporary Economic Policy, 38(2), 289–303. https://doi.org/10.1111/coep.12461

Dobbelaere

Hirsch

Mueller

Neuschaeffer

(2024). Organized labor, labor market imperfections, and employer wage premia. ILR Review, 77(3), 396–427. https://doi.org/10.1177/00197939241237757

Ducking

Groothuis

P. A.

Hill

J. R.

(2014). Minimum pay scale and career length in the NBA. Industrial Relations: A Journal of Economy and Society, 53(4), 617–635. https://doi.org/10.1111/irel.12071

Fort

Lee

Y. H.

(2006). Stationarity and Major League Baseball attendance analysis. Journal of Sports Economics, 7(4), 408–415. https://doi.org/10.1177/1527002505276717

Fort

Lee

Y. H.

(2007). Structural change, competitive balance, and the rest of the major leagues. Economic Inquiry, 45(3), 519–532. https://doi.org/10.1111/j.1465-7295.2007.00026.x

10.

Freeman

R. B.

Medoff

J. L.

(1984). Trade unions and productivity: Some new evidence on an old issue. The ANNALS of the American Academy of Political and Social Science, 473(1), 149–164. https://doi.org/10.1177/0002716284473001015

11.

Groothuis

P. A.

Rotthoff

K. W.

Strazicich

M. C.

(2017). Structural breaks in the game. Journal of Sports Economics, 18(6), 622–637. https://doi.org/10.1177/1527002515593113

12.

Hausman

J. A.

Leonard

G. K.

(1997). Superstars in the National Basketball Association: Economic value and policy. Journal of Labor Economics, 15(4), 586–624. https://doi.org/10.1086/209839

13.

Hill

J. R.

Groothuis

P. A.

(2001). The new NBA collective bargaining agreement, the median voter model, and a Robin Hood rent redistribution. Journal of Sports Economics, 2(2), 131–144. https://doi.org/10.1177/152700250100200203

14.

Hill

J. R.

Jolly

N. A.

(2012). Salary distribution and collective bargaining agreements: A case study of the NBA. Industrial Relations: A Journal of Economy and Society, 51(2), 342–363. https://doi.org/10.1111/j.1468-232X.2012.00680.x

15.

Humphreys

B. R.

Johnson

(2020). The effect of superstars on game attendance: Evidence from the NBA. Journal of Sports Economics, 21(2), 152–175. https://doi.org/10.1177/1527002519885441

16.

Jann

(2016). Assessing inequality using percentile shares. The Stata Journal, 16(2), 264–300. https://doi.org/10.1177/1536867X1601600202

17.

Johnson

(2021). Loss aversion, reference-dependent preferences, and collective bargaining agreements in the National Basketball Association. International Journal of Sport Finance, 16(2), 69–78. https://doi.org/10.32731/IJSF.162.052021.02

18.

Kaplan

S. M.

(2022). Putting a price on popularity: Evidence from superstars in the National Basketball Association. Economic Inquiry, 60(3), 1357–1381. https://doi.org/10.1111/ecin.13065

19.

Kaplan

S. M.

(2024). Leveling the playing field: The distributional impact of maximum- and minimum-level contracts on player compensation. Contemporary Economic Policy, 42(2), 375–391. https://doi.org/10.1111/coep.12621

20.

Lee

Strazicich

M. C.

(2001). Break point estimation and spurious rejections with endogenous unit root tests. Oxford Bulletin of Economics and Statistics, 63(5), 535–558. https://doi.org/10.1111/1468-0084.00234

21.

Lee

Strazicich

M. C.

(2003). Minimum Lagrange multiplier unit root test with two structural breaks. Review of Economics and Statistics, 85(4), 1082–1089. https://doi.org/10.1162/003465303772815961

22.

Lee

Strazicich

M. C.

(2013). Minimum LM unit root test with one structural break. Economics Bulletin, 33(4), 2483–2492. Retrieved from https://ideas.repec.org/a/ebl/ecbull/eb-13-00296.html

23.

Lee

Y. H.

Fort

(2005). Structural change in MLB competitive balance: The depression, team location, and integration. Economic Inquiry, 43(1), 158–169. https://doi.org/10.1093/ei/cbi011

24.

Lee

Y. H.

Fort

(2008). Attendance and the uncertainty-of-outcome hypothesis in baseball. Review of Industrial Organization, 33(4), 281–295. https://doi.org/10.1007/s11151-008-9193-9

25.

Lee

Y. H.

Fort

(2012). Competitive balance: Time series lessons from the E nglish P remier L eague. Scottish Journal of Political Economy, 59(3), 266–282. https://doi.org/10.1111/j.1467-9485.2012.00580.x

26.

Mills

B. M.

Fort

(2014). League-level attendance and outcome uncertainty in US pro sports leagues. Economic Inquiry, 52(1), 205–218. https://doi.org/10.1111/ecin.12037

27.

Minuci

E. G.

Johnson

(2025). The impact of the 2017 collective bargaining agreement on wage discrimination in the NBA. Applied Economics, 57(5 ), 543–546. https://doi.org/10.1080/00036846.2024.2305608

28.

Perron

(1995). Unit root tests in ARMA models with data-dependent methods for the selection of the truncation lag. Journal of the American Statistical Association, 90(429), 268–281. https://doi.org/10.1080/01621459.1995.10476510

29.

Nieswiadomy

M. L.

Strazicich

M. C.

Clayton

(2012). Was There a Structural Break in Barry Bonds’s Bat? Journal of Quantitative Analysis in Sports, 8(3). Retrieved from https://www.degruyter.com/document/doi/10.1515/1559-0410.1305 https://doi.org/10.1515/1559-0410.1305

30.

Nunes

L. C.

Newbold

Kuan

C-M

(1997). Testing for unit roots with breaks: Evidence on the Great Crash and the Unit Root hypothesis reconsidered. Oxford Bulletin of Economics and Statistics, 59(4), 435–448. https://doi.org/10.1111/1468-0084.00076

31.

Palacios-Huerta

(2004). Structural changes during a century of the world?S most popular sport. Statistical Methods & Applications, 13(2), 241–258. https://doi.org/10.1007/s10260-004-0093-3

32.

Parsons

D. O.

(1992). The internal distribution of union rents: An empirical test of the voting power model. The Review of Economics and Statistics, 74(3), 439. https://doi.org/10.2307/2109488

33.

Perron

Vogelsang

T. J.

(1992). Testing for a unit root in a time series with a changing mean: Corrections and extensions. Journal of Business & Economic Statistics, 10(4), 301-320.

34.

Sadler

R. T.

Sanders

(2016). The 2011-2021 NBA collective bargaining agreement. Managerial Finance, 42(9), 891–901. https://doi.org/10.1108/MF-02-2016-0048

35.

Schmidt

M. B.

Berri

D. J.

(2004). The impact of labor strikes on consumer demand: An application to professional sports. American Economic Review, 94(1), 344–357. https://doi.org/10.1257/000282804322970841

36.

Scully

G. W.

(1995). The market structure of sports. Univ. of Chicago Press.

37.

Staudohar

P. D.

(1999). Labor relations in basketball: the lockout of 1998-99. Monthly Lab. Rev, 122(3).

38.

Turner

Hakes

J. K.

(2007). The Collective Bargaining Effects of NBA Player Productivity Dynamics. SSRN Electronic Journal. Advance online publication. https://doi.org/10.2139/ssrn.1017556

39.

White

M. D.

(1982). The intra-unit wage structure and unions: A median voter model. ILR Review, 35(4), 565–577. https://doi.org/10.1177/001979398203500408

40.

Zangelidis

(2008). Seniority profiles in unionized workplaces: Do unions still have the edge? Oxford Bulletin of Economics and Statistics, 70(3), 327–345. https://doi.org/10.1111/j.1468-0084.2007.00495.x

41.

Zwick

(2011). Seniority wages and establishment characteristics. Labour Economics, 18(6), 853–861. https://doi.org/10.1016/j.labeco.2011.06.003