Leveling the playing field: The distributional impact of maximum‐ and minimum‐level contracts on player compensation

Abstract How does the presence of maximum‐ and minimum‐level contract restrictions impact (i) superstar compensation (ii) distribution across an industry? Using ticket price observed player talent data from National Basketball Association (NBA), I estimate expected salaries for each as well their value to NBA a whole. find ratio actual salary is 2.8%–56.9% most talented players, resulting in subsidization less players. The findings also suggest players generate significantly more than salaries.