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THE PAYOFF TO CONSISTENCY IN PERFORMANCE
Author(s) -
Deutscher Christian,
Gürtler Oliver,
Prinz Joachim,
Weimar Daniel
Publication year - 2017
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/ecin.12415
Subject(s) - economics , basketball , consistency (knowledge bases) , wage , stochastic game , product (mathematics) , production (economics) , marginal product , econometrics , microeconomics , test (biology) , labour economics , computer science , mathematics , geometry , archaeology , artificial intelligence , history , paleontology , biology
This study investigates whether firms are willing to pay higher wages to workers who demonstrate consistent performance than to those whose performance is more volatile. A formal model reflects a production technology view, assuming the law of diminishing marginal product. This model suggests that a more consistent worker produces higher expected output and therefore receives a higher wage. The test of the model uses data from the National Basketball Association. The empirical data support the model: Players whose performances were more consistent than the performances of other players received higher wages on average. ( JEL D41, J31, M52, Z20)