Salary Determination in the National Hockey League Is Arbitration Efficient?

Abstract

The final-offer arbitration system in baseball has been studied quite extensively, but there has not been an investigation into the effects of the arbitration system used in the National Hockey League (NHL). The goal of this study is to determine if arbitrated salaries in the NHL differ from negotiated salaries. Following the work of Ashenfelter, the objective of arbitrators is to use the same factors in making their arbitration decisions as are used for negotiated salaries. The results show that for forwards and defensemen, arbitrated salaries are not significantly different from negotiated salaries.