Date of Defense

12-7-2012

Date of Graduation

12-2012

Department

Economics

First Advisor

Donald Alexander

Second Advisor

William Kern

Third Advisor

Donald Meyer

Abstract

This thesis will attempt to estimate the relationships between salary and measures of the marginal productivity of hockey players, or performance indicators. Salary determination, as in most other sports leagues, is determined in a labor market. Each player has a marginal revenue product of labor (MRPL) and this MRPL varies from player to player, and from team to team. Firms, in this case teams, seek to add players with a high MRPLin order to increase the quantity and quality of product they sell, in this case wins. Among other things, a player has a MRPLthat will equate to the additional revenue and additional productivity they are able to bring in. How do teams, or economists, determine what this is though? Unlike a typical labor market that uses factors such as age, education, experience levels, etc. to determine the corresponding MRP^ sports leagues are unique in that these characteristics directly taken from easily-tracked performance indicators. These performance indicators will be goals, assists, plus/minus rating, and career games and will represent the marginal product of labor (MPL) in the wage equation. In addition to performance indicators, the All-Star variable is a measure of fan preference. This will be used to control for potential differences in marginal revenue that may be added if the player is hired. Past studies have recognized the important differences between forwards and defensemen, to separate these two groups; a dummy has been added as the final variable. However, these past studies have neglected one key factor in analyzing salary determination in the NHL, and that is the difference between restricted and unrestricted free agents.

Access Setting

Honors Thesis-Open Access

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