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Japanese Players in Major League Baseball: an Econometric Analysis of Labor Discrimination

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Japanese Players in Major League Baseball: an Econometric Analysis of Labor Discrimination Japanese Players in Major League Baseball: An Econometric Analysis of Labor Discrimination The Honors Program Senior Capstone Project Kyle Audet Faculty Advisor: Jongsung Kim May 2009 Table of Contents Abstract ..................................................................................................................................... 1 Introduction ............................................................................................................................... 2 Fundamentals of Japanese Baseball .......................................................................................... 4 Brief History of Baseball in Japan ............................................................................................ 6 Posting System .......................................................................................................................... 8 Kōshien ................................................................................................................................... 10 Game-Play and Cultural Differences ...................................................................................... 11 Internationalization of Major League Baseball ....................................................................... 13 Introduction to Econometric Study ......................................................................................... 16 Literature Review – Econometric Study ................................................................................. 18 Salary Regression Analysis ..................................................................................................... 24 Batter Regressions ............................................................................................................ 27 Oaxaca Decomposition - Batters ...................................................................................... 38 Pitcher Regressions .......................................................................................................... 40 Oaxaca Decomposition – Pitchers ................................................................................... 49 Evaluating Average Difference in Salary Level ................................................................. 51 Batters .............................................................................................................................. 51 Pitchers ............................................................................................................................. 54 Evaluating Returns to Age .................................................................................................. 56 Batters .............................................................................................................................. 56 Pitchers ............................................................................................................................. 59 Positional Discrimination ........................................................................................................ 61 Customer Discrimiation: Does Market Representation Influence Team Representation ...... 65 Segregation and Performance Analysis: Inclusive vs. Homogeneous .................................... 67 Conclusion .............................................................................................................................. 73 Appendices .............................................................................................................................. 78 Appendix A – Statistical Category Calculations ................................................................. 79 Appendix B – Batter Regressions ....................................................................................... 81 Traditional Method - Batters ............................................................................................ 82 Sabermetric Method – Batters .......................................................................................... 84 Hyrbid Method – Batters .................................................................................................. 86 Oaxaca Decomposition – Batters ..................................................................................... 88 Appendix C – Pitchers Regressions .................................................................................... 90 Traditional Method – Pitchers .......................................................................................... 91 Hybrid Method – Pitchers ................................................................................................ 93 Oaxaca Decomposition – Pitchers ................................................................................... 95 Appendix D - Evaluating Average Difference in Salary Level .......................................... 99 Batters .............................................................................................................................. 99 Pitchers ........................................................................................................................... 101 Appendix E - Evaluating Returns to Age .......................................................................... 102 Batters ............................................................................................................................ 102 Pitchers ........................................................................................................................... 104 Works Cited .......................................................................................................................... 105 Japanese Players in Major League Baseball: An Econometric Analysis of Labor Discrimination Senior Capstone Project for Kyle Audet ABSTRACT In recent years, Major League Baseball (MLB) teams have increasingly drawn talent from the international market. This study employs econometric techniques to test the various labor discrimination issues facing Japanese players playing in America’s MLB. There have been remarkably few studies focusing on Japanese players in MLB. Data from the 1995 to 2007 season has been analyzed. High degrees of discriminatory pay scales are found for Japanese pitchers. The findings suggest that Japanese batters do not face such pay discrimination. Positional discrimination has also been the subject of investigation. Japanese players are found to be disproportionally pitchers. Suggestions for future research topics are presented. 1 Japanese Players in Major League Baseball: An Econometric Analysis of Labor Discrimination Senior Capstone Project for Kyle Audet INTRODUCTION This paper will investigate issues pertinent to the assimilation of Japanese baseball players in the United States’ Major League Baseball system. In order to gain a more complete understanding of this issue, broad research has been conducted in the area of baseball’s historical place in Japanese history. In Japan, “America’s” game thrives in its own right. This study includes passages detailing various aspects of baseball in Japan. The fundamentals of Japanese baseball are introduced first. Following this section, a brief historical context of baseball in Japan and an explanation of the posting system is provided. Koshien, the annual high school tournament is also profiled. Game play differences between Major League Baseball (MLB) and Japan’s Nippon Professional Baseball (NPB) league will be interesting to even the most casual baseball spectator. Several of baseball’s factual and hypothetical globalization efforts are also provided in the introductory pages of this study. The main purpose of this study is to investigate the issue of discrimination, using econometric analysis, regarding Japanese baseball players playing in America’s Major League Baseball. Of this topic, salary discrimination will be the main focus. Various econometric and statistical devices, including linear regression, the Chow Test, “bootstrapping”, random sampling, and Oaxaca decomposition will be utilized in order to best reveal the true nature of labor market discrimination towards Japanese-born players in Major League Baseball. Positional segregation as well as salary discrimination will be investigated. Demographic influences and inclusive team performance have also been analyzed, albeit to a lesser extent. The following is a list of specific questions that this study attempts to addresses: 1. What are the best salary predictors for Japanese-born players playing in the United States and do these differ from non-Japanese players? 2. Does the average salary level of equally talented players 1 differ between Japanese and Non-Japanese? 3. Do returns-to-experience 2 in MLB differ between Japanese and Non-Japanese? 4. Do Japanese-born players playing in the United States face positional discrimination? 1 For both batters and pitchers 2 For both batters and pitchers 2 Japanese Players in Major League Baseball: An Econometric Analysis of Labor Discrimination Senior Capstone Project for Kyle Audet 5. Do Japanese-born players playing in the United States face customer discrimination? 6. Do inclusive teams 3 perform better 4 than their homogeneous counterparts? 7. What are the characteristics of inclusive teams 5 and do they differ from their homogeneous counterparts? Please note: “Call-out” boxes like this one have been utilized in an effort to help bring attention to the main conclusions of this study; look for them throughout. 3 With respect to Japanese born players 4 In terms
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