Rent Sharing and Gender Discrimination: Causal Evidence from Collegiate Athletics

Abstract

ObjectiveIn this article, we analyze whether firms with market power—measured by their market share—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 top‐level collegiate athletics, we assess the effect of market power—measured by market share—on the relative employment and wages of female coaches.MethodsTo account for the potential endogeneity of market power and unobserved productivity of female coaches, we exploit the effect of an institutionalized cartel, that is, the Bowl Championship Series (BCS), on a college's athletic department market share. By exploiting particular organizational characteristics of the BCS as an exogenous shock, we establish a causal link between market power and female employment.ResultsOur results show that an increase in the market share has a negative effect on females relative to males among coaches.ConclusionWe interpret this as evidence for Becker's (1957) theory on employer discrimination.