The Introduction Of The Reserve Clause And Its Impact On Baseball Salaries During The 1880s: A Panel Estimation
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One of the most frequently studied areas in professional baseball is the Reserve Clause. Originally introduced in 1879 by the National League, the Reserve Clause indefinitely tied a player's services to his current team and was implemented in an attempt to prevent baseball salaries from increasing and reduce team expenses. However, it was also used to control player mobility as well. While the majority of economic research on the Reserve Clause focuses on the post-Reserve Clause era, this paper analyzes the Reserve Clause during its infancy in the 1880s, a period when professional baseball was just beginning, and its impact on baseball salaries. This study illustrates that the Reserve Clause did not have a significant impact on baseball salaries during the beginning of professional baseball, despite team owners' intentions.