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Full-Text Articles in Labor Economics
Compensating Against Turnover: Managers' Talent Retention Decisions In Major League Baseball Under A Budget Constraint, Emma Knoesen
Compensating Against Turnover: Managers' Talent Retention Decisions In Major League Baseball Under A Budget Constraint, Emma Knoesen
Scripps Senior Theses
From 1997 to 1999 and 2003 to the present, Major League Baseball has had a luxury tax on high payroll teams. This paper analyzes the impact of the tax as a budget constraint on teams’ ability to reward and retain high performing players. In contrast to other papers, we use wins above replacement (WAR), a popular sabermetrics statistic, to measure performance. Using this metric, we quantify the number of top performers, how this performance is rewarded with salary, and how salary impacts players’ mobility decisions. We conclude that when using WAR, the distribution of performance is not heavy tailed and …