Measuring and Decomposing the Distance to the Shapley Wage Function with Limited Data

Victor Aguiar, Roland Pongou () and Jean-Baptiste Tondji ()
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Roland Pongou: Department of Economics, University of Ottawa
Jean-Baptiste Tondji: Department of Economics, University of Ottawa

No 1613e, Working Papers from University of Ottawa, Department of Economics

Abstract: We study the Shapley wage function, a wage scheme in which a worker's pay depends both on the number of hours worked and on the output of the firm. We then provide a way to measure the distance of an arbitrary wage scheme to this function in limited datasets. In particular, for a fixed technology and a given supply of labor, this distance is additively decomposable into violations of the classical axioms of efficiency, equal treatment of identical workers, and marginality. The findings have testable implications for the different ways in which popular wage schemes violate basic properties of distributive justice in market organizations. Applications to the linear contract and to other well-known compensation schemes are shown.

Keywords: Shapley wage function; firm; fairness violations; linear contract; bargaining; limited data (search for similar items in EconPapers)
JEL-codes: C71 C78 D20 D30 J30 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2016
New Economics Papers: this item is included in nep-lma
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Citations: View citations in EconPapers (4)

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Working Paper: Measuring and decomposing the distance to the Shapley wage function with limited data (2016)
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