Rent Sharing and Gender Discrimination in Collegiate Athletics

Project Start:01/2016
Researchers:Mario Lackner, Christine Zulehner
Category: Law and Finance
Funded by:LOEWE

In this paper, we analyze whether firms with market power fill top management positions differently than firms with no market power. Market power gives firms the opportunity to share rents with their employees. If these firms or their owners also have a taste for discrimination, they may share their rents in a discriminatory way. Using data from various sport teams in collegiate athletics, we assess the effect of market power measured by market share on the employment and wages of female coaches. To account for the potential endogeneity of market power and unobserved productivity of female coaches, we exploit the effect of an institutionalized cartel, ie., the Bowl Championship Series (BCS), on a college's market share in other sports. By exploiting the existence of the Bowl Championship Series (BCS) as an exogenous shock, we establish a causal link between market power and female employment. Our results show that an increase in the market share has a negative effect on females relative to males among coaches. We interpret this as evidence for Becker (1957) 's theory on employer discrimination.