The Importance of Team Fit for NBA Rookies’ Career Earnings

Abstract

Workers entering the labor market often face a trade off between job matches that maximizes their short run and long run compensation. This trade off is influenced by peers who may enhance or diminish the worker’s productivity, and thus affect their future salary. We study this question for rookies in the National Basketball Association (NBA). We find that for rookies drafted between 2011 and 2017, playing with teammates that facilitated them getting 1 additional point per 100 possessions was predicted to increase the value of their second contract by between 9.9% and 23.6%. This implies that being drafted by the team that provides the ‘best fit’ is an important determinant of a rookie’s future earnings.