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WAGES AND LABOR PRODUCTIVITY: EVIDENCE FROM INJURIES IN THE NATIONAL FOOTBALL LEAGUE
Author(s) -
GregorySmith Ian
Publication year - 2021
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.12960
Subject(s) - league , productivity , football , economics , labour economics , salary , shock (circulatory) , identification (biology) , efficiency wage , marginal product , empirical evidence , wage , microeconomics , production (economics) , macroeconomics , market economy , biology , political science , medicine , philosophy , physics , botany , epistemology , astronomy , law
Empirical studies face severe difficulties when identifying the relationship between wages and labor productivity. This paper presents a novel identification strategy and demonstrates that the connection between wages and labor productivity is remarkably robust even when institutional constraints serve to distort the relationship. Identification is achieved by considering injuries to professional football players as an exogenous shock to labor productivity. This is an ideal empirical setting because injured players in the National Football League cannot be replaced easily because franchises are constrained by the salary cap. Injuries are shown to play a major role in franchise success and a tight connection between wages and marginal productivity emerges. This is in spite of regulatory frictions that serve to hold down wages for some workers. ( JEL J24, J31, Z22)