Temporary employment and the protection of investments in human capital: Examining the Major League Baseball player market

Abstract

When employees are employed in a temporary capacity, employers should be less willing to invest in their human capital relative to permanent employees. This study uses the context of injury management by Major League Baseball teams to test for differential investment in the protection of player human capital. Injury management is inherently uncertain as medical professionals can give differing opinions, so teams may be able to influence recovery times. Using a panel dataset and estimating player fixed-effects regressions, players are found to miss significantly fewer games to injury when employed on a temporary basis.