Baseball-Specific Human Capital: Why Good but Not Great Players Are More Likely to Coach in the Major Leagues

The career choice of retiring athletes provides an interesting example of a midcareer transition conditioned on specific human capital. Previous research examines the determination of earnings in professional sports [3; 5; 14], but does not consider how skills developed during an athlete's playing years affect subsequent opportunities. In this paper I test the hypothesis that skills specific to baseball increase the probability a player will choose to coach. The empirical work confirms the importance of baseball-specific human capital in the decision to coach, and provides some of the first formal evidence that the opportunities of star players differ distinctly from players that are marginally less talented. In the theoretical section, I develop a random utility model in which a retiring player chooses between coaching and non-coaching careers on the basis of potential earnings and a random taste component. Earnings in either career are determined by a vector of career attributes that embody the player's productivity in each. If the random taste component is normally distributed, the probability a player chooses a coaching career can be estimated using probit. The empirical results support the predictions of the model that baseball-specific human capital is positively correlated with the probability of a player coaching, and that star players are unlikely to coach because their marginal skill advantage is not baseball-specific. In particular, the findings imply that players with long but unexceptional careers are more likely to coach in the major leagues. An extension of the empirical model is applied to the issue of discrimination. The insignificance of a black dummy variable suggests that black players have the same probability of coaching as comparably skilled white players. However, a more complex interactive specification suggests that relatively poor opportunities for black stars outside the game leads to their crowding out those black players who, if they were white, would most likely coach.