2004 Working Papers

• Working Paper 04-101: "Baseball Strikes and the Demand for Attendance" by Dennis Coates and Thane Harrison.

  Abstract: Professional baseball has experienced numerous work-stoppages over the last 30 years, including three which resulted in the cancellation of games. Existing estimates of the demand for attendance at Major League Baseball games has found that only those events which caused the loss of games influenced attendance. This paper revisits the issue of whether strikes affect attendance and finds that even those lockouts and strikes that do not cause games to be canceled are associated with significantly lower attendance. Moreover, despite dramatic differences in the severity of the three strikes that canceled games, one cannot reject the hypothesis that the effects are the same. Finally, the evidence here suggests that attendance is adversely affected by events leading up to negotiation of a new Basic Agreement between the players and the owners.

• Working Paper 04-102: "Legal Minimum Wages and the Wages of Formal and Informal Sector Workers in Costa Rica" by T. H. Gindling and Katherine Terrell

  Abstract: The classic dual economy models of developing countries hold minimum wages (among other institutions) accountable for persistent dualism. They note that applying or enforcing minimum wage laws in only one sector of the economy will create wage differentials which will not be eroded with labor mobility to the high wage sector. In this paper we use 12 years of micro data on thousands workers living in Costa Rica to test whether legal minimum wages have a differential impact on the wages of workers in the formal sector vs. informal sector, defined in various ways in accordance with the dual development models. The evidence from Costa Rica is contrary to the assumptions of these models. We find that increases in minimum wages not only raise the wages of workers in the urban formal sector (large urban enterprises) who are covered by minimum wage law, but they also increase the wages of all other workers covered by minimum wage legislation in what are traditionally regarded as informal sectors and where the legislation is often considered not to be enforced. Specifically, we provide evidence that minimum wages increase the wages of workers in small urban enterprises, large rural enterprises and small rural enterprises. Further, our results suggest that higher legal minimum wages raise the average wage of workers in these "informal" sectors more than in the urban formal sector. We concluded that in Costa Rica minimum wages are being enforced in the rural and small scale sectors and may actually work to reduce average wage differentials between these sectors and the urban formal sector. On the other hand, minimum wages have no significant impact on the wages of workers in another sector that is regarded as informal but which is not covered by minimum wage legislation: the self-employed workers (both urban and rural). Thus, one could argue that minimum wages may contribute to dualism between the formal and informal, defined as self-employed vs. salaried workers. However, we find no evidence of the bleaker scenario, that self-employed earnings are being lowered by minimum wages.

2003 Working Papers

• Working Paper 03-101: "Novelty Effects of New Facilities on Attendance at Professional Sporting Events" by Dennis Coates and Brad R. Humphreys.

  Abstract: We investigate the possibility that new facilities affect attendance - the "novelty effect" - in professional baseball, basketball, and football from 1969-2001 by estimating the parameters of a reduced form attendance model. Our results indicate a strong, persistent novelty effect in baseball and basketball and little or no novelty effect in football. Our estimates of size and duration of the novelty effect imply that, in a new facility, at a minimum, a baseball team would sell an additional 2,561,702 tickets over the first eight seasons, a basketball team 446,936 over the first nine seasons, and a football team 163,436 over the first five seasons. This increase in attendance also suggests a corresponding increase in revenues that could be tapped to help defray the large public subsidies that state and local governments frequently provide to new stadium and arena construction projects.

• Working Paper 03-102: "The Relationship Between Big-Time College Football and State Appropriations to Higher Education" by Brad R. Humphreys.

  Abstract: I investigate the relationship between big-time college football programs and state appropriations to public institutions of higher education. Estimation of a linear reduced form model of the determination of state appropriations to higher education, using a panel of financial, athletic, and state-specific economic data from 570 public institutions of higher education at the Baccalaureate level or higher from 1976-1996 shows that schools with Division I-A football programs receive about 6% more in state appropriations than schools that do not field a Division I-A football team. Institutions with successful football teams receive 3% to 8% increases in state appropriations the following year. Defeating an in-state rival in a prominent football game is also associated with an increased level of appropriation in the following year. These results support the predictions of the model of competition for political influence among pressure groups developed by Becker (1983) and suggest that the total economic benefit associated with big-time athletic programs may be larger than previously thought.

• Working Paper 03-103: "Professional Sports Facilities, Franchises and Urban Economic Development" by Dennis Coates and Brad R. Humphreys.

  Abstract: Local political and community leaders and the owners of professional sports teams frequently claim that professional sports facilities and franchises are important engines of economic development in urban areas. These structures and teams allegedly contribute millions of dollars of net new spending annually and create hundreds of new jobs, and provide justification for hundreds of millions of dollars of public subsidies for the construction of many new professional sports facilities in the United Sates over the past decade. Despite these claims, economists have found no evidence of positive economic impact of professional sports teams and facilities on urban economies. We critically review the debate on the economic effects of professional sports and their role as an engine of urban economic redevelopment, with an emphasis on recent economic research.

• Working Paper 03-104: "The Effect of Professional Sports on the Earnings of Individuals: Evidence from Microeconomic Data" by Dennis Coates and Brad R. Humphreys.

  Abstract: This paper explores the impact of professional sports teams and stadiums on the wages of individuals employed in several narrowly defined occupational groups in cities in the United States. The occupational groups examined are among those that proponents of public funding of professional sports claim will benefit economically from these stadiums. Our analysis uses data from the March Supplement to the Current Population Survey (CPS) for the period 1977 to 1998 as well as sports variables previously utilized by Coates and Humphreys (1999), (2001). Previous research focused on aggregate measures of income whereas here the focus is on the wages of individual workers. The results of the study confirm conclusions of earlier research that the overall sports environment is frequently statistically significant as a determinant of earnings and that the predicted mean impact of sports on wages in a sample of individuals employed in occupations closely related to professional sports is an annual average decrease in real earnings of $47.95. The results also show that the effects of the sports environment on wages differ across job-types. Workers in retail occupations earn more on average each year due to the presence of professional sports while workers in other peripherally related occupations like food services and hotels earn less.

• Working Paper 03-105: "Voting on Stadium and Arena Subsidies" by Dennis Coates and Brad R. Humphreys.

  Abstract: We analyze voting on subsidies for professional sports facilities in Harris County (Houston), Texas and Brown County (Green Bay), Wisconsin to learn more about voter preferences for these subsidies. The results differ somewhat between the two jurisdictions, as do the nature of the supports being proposed and the communities. One consistent result is that voting precincts that have a relatively high degree of poverty tend to oppose subsidies for professional sports. Another consistent result is that voters in close proximity to existing facilities are more likely to favor subsidies than are voters living farther from the facilities. In Harris County, the results consistently indicate that those over 65 years of age, whites, and those with Bachelors degrees statistically significantly oppose subsidies while those with higher incomes and blacks favor the subsidies. Different values of consumption benefits, stemming from differences in preferences, may explain these voting patterns.

• Working Paper 03-106: "Agency Behavior in a Nonprofit Setting: Effects of the 1984 Supreme Court NCAA Decision " by Kathleen A. Carroll and Brad R. Humphreys.

  Abstract: The NCAA is commonly viewed as a cartel. We model the cartel relationship between the member teams and the NCAA central organization as a principal-agent relationship. Our model predicts imperfect agency behavior on the part of the NCAA with corresponding overregulation relative to the level preferred by the member teams. We empirically test the model by examining the impact of the 1984 Supreme Court decision that reassigned the telecast rights for intercollegiate football from the NCAA to the individual member teams. Our empirical estimates of telecasts, attendance, and competitive balance support the prediction of imperfect agency behavior by the NCAA.

• Working Paper 03-107: "Literacy and Mobility in Rural versus Urban Victorian England: Evidence from linked marriage register and census records for Birmingham and Norfolk, 1851 and 1881" by David Mitch.

  Abstract: This paper reports procedures and results obtained from linking marriage registers with the 1851 and 1881 censuses for Birmingham, a major industrial center, and rural areas in Norfolk. The results underscore regional contrasts in mobility processes. Those starting out in Birmingham from unskilled origins whether parental or initial occupation, had quite high probabilities of experiencing upward occupational mobility. Probabilities for those of unskilled origin were considerably lower in rural Norfolk; but for those of higher origins mobility rates could at least equal if not exceed those in Birmingham. More strikingly, literacy offered considerably greater prospects for advancement for those in rural Norfolk than industrial Birmingham. Basic education could matter more to the aspiring farm bailiff or rural shopkeeper than for the nail-maker or gunsmith. The career impact of literacy over and above impact on initial occupation at marriage was especially sizable for agricultural Norfolk in the earlier time period. The results suggest differences in the migration patterns in the two areas with overall rates of migration being higher in Norfolk, but migration rates for the upwardly occupationally mobile being greater in Birmingham. There was no clear connection between literacy and geographic mobility. Thus, the results here do indicate a positive association between industrialization and occupational mobility. But they also underscore that mobility did occur in agricultural areas and that education could play at least as great a role in facilitating mobility in agricultural as in industrial areas.

• Working Paper 03-108: "Accounting for Changing Inequality in Costa Rica, 1980-1999" by T. H. Gindling.

  Abstract: After declining from the mid-1970s to the mid-1980s, earnings inequality in Costa Rica stabilized from 1987 to 1992 and then increased from 1992 to 1999. In this paper we use recently-developed techniques to measure the extent to which these changes in earnings inequality were the result of changes associated with the distributions (or .quantities.) of personal and work place characteristics of workers, and the earnings differences (or .prices.) associated with those characteristics. We present evidence that the most important cause of the fall in inequality prior to 1987 was a decline in returns to education, which in turn was caused by an increase in the supply of more-educated workers. We find that the most important causes of rising inequality in the 1990s were the end of this decline in returns to education and increases in the variance of hours worked among workers. Inequality in hours worked increased because of an increase in the proportion of workers working a non-standard work week (part-time or over-time)

• Working Paper 03-109: "LA DESIGUALDAD EN AMÉRICA CENTRAL DURANTE LOS AÑOS NOVENTA" by T. H. Gindling and Juan Diego Trejos.

  Abstract: Este trabajo pretende examinar dos preguntas: ¿cómo y por qué cambió la distribución de los ingresos en los países de América Central en los años noventa?, y, ¿por qué están los ingresos distribuido en una manera más equitativa en Costa Rica en comparación a los otros países de la región?. Para buscar respuestas a estas preguntas, se usa una técnica, basada en la estimación de ecuaciones de remuneración, que mide la magnitud de la desigualdad debido a diferentes características personales y del puesto de trabajo. La dirección de los cambios en la desigualdad del ingreso en los países Centroamericanos en los años noventa no es clara. Solamente Costa Rica presenta un deterioro claro en la distribución del ingreso. En los otros países, los resultados dependen de la medida de la desigualdad y del preceptor que se utilice. Pero bajo de estos cambios brutos, se encuentran fenómenos comunes en todos los países en los mercados de trabajo. El aumento en la dispersión de las jornadas de trabajo, es el fenómeno que se identifica con el mayor impacto negativo sobre equidad. Se identifican dos causas importantes de los diferentes niveles de desigualdad entre Costa Rica y el resto de los países de América Central. Primero, la educación está más igualitariamente distribuida en Costa Rica que en el resto de la región. Segundo, las diferencias salariales entre las zonas urbanas y rurales son más bajas en Costa Rica. Estos resultados implican que las políticas Costarricenses de la universalización de la educación primaria y de proveer aún a las comunidades rurales más aisladas de infraestructura económica y social son también causas importantes de las diferencias n la desigualdad entre Costa Rica y el resto de Centroamérica.

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