Testing Fair Wage Theory

John Burger and Stephen Walters ()
Additional contact information
Stephen Walters: Department of Economics, Loyola College in Maryland

No 623, Working Papers from International Association of Sports Economists, North American Association of Sports Economists

Abstract: Fairness considerations often are invoked to explain wage differences that appear unrelated to worker characteristics or job conditions, but non-experimental tests of fair wage models are rare and weak because of the limits of available market-generated data. In particular, such data rarely permit researchers to (a) identify suitable reference points that employees and employers might use in determining what is fair and (b) control for employees’ marginal output and its value. This study utilizes a unique dataset from the baseball labor market that solves both problems. We find no support for fair wage theory in this market. We also find that fairness premia can be illusory: Wages appear to be adjusted upward for reasons of fairness in regressions that control for variation in individuals’ physical output, but such premia evaporate when the value of that output (which can be market- or firm-specific) is held constant. This suggests that avoiding proxy measures of workers’ marginal revenue products in wage studies might reduce the number of labor market "anomalies" economists must resolve.

Keywords: fairness; efficiency wages; wage differentials (search for similar items in EconPapers)
JEL-codes: D63 J31 J41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-10
New Economics Papers: this item is included in nep-cbe and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://web.holycross.edu/RePEc/spe/BurgerWalters_FairWage.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://web.holycross.edu/RePEc/spe/BurgerWalters_FairWage.pdf [302 Found]--> https://web.holycross.edu/RePEc/spe/BurgerWalters_FairWage.pdf)

Related works:
Journal Article: Testing Fair Wage Theory (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spe:wpaper:0623

Access Statistics for this paper

More papers in Working Papers from International Association of Sports Economists Contact information at EDIRC., North American Association of Sports Economists Contact information at EDIRC.
Bibliographic data for series maintained by Victor Matheson ().