The Economics of Baseball’s Labor Market: Part 1

Here I begin to create an economic model of the labor market for baseball. By estimating the number of wins a player is worth, estimating the average value of a win, we can learn about their contribution to a team in terms of revenue generated. By subtracting out their wages, the player’s surplus or cost to a team, known as their rent, can be estimated as well. This model has applications in determining the rational¬† economic response of teams as they strive to the goal of winning profitably.

Originally Published: 1/4/18