Free agents’ impact on the labor market for baseball players

This paper evaluates the 1976 free agent rule’s impact on the labor market for baseball players. Free agency has specific consequences for monopsonistic exploitation and racial discrimination in salary determination. It reduces monopsonistic exploitation for all players and increases salary opportunities for black and Latino players. However, this change in a player’s status vis-à-vis a team has generated salary disparities among players based, not on race, but bargaining position. I would like to thank Linda Kammann, Mary O’Brien, and Benjamin Preston for their research assistance. Also I wish to thank John Siegfried and an anonymous referee for their comments. I remain solely responsible for the contents of this paper.