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The Upside Potential of Hiring Risky Workers: Evidence from the Baseball Industry

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Author Info

  • Christopher R. Bollinger

    (University of Kentucky)

  • Julie L. Hotchkiss

    (Georgia State University and the Federal Reserve Bank of Atlanta)

Abstract

Making use of performance data for baseball players, this article provides empirical evidence in support of Lazear's (1998) theoretical predictions that (1) risky workers will earn a premium for their upside potential, (2) this risk premium will be higher the longer a worker's work life, and (3) firms must enjoy some comparative advantage in the labor market to be willing to pay a premium to risky workers. The validity of Lazear's predictions carries implications for wage differentials between young and old workers and between men and women.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 21 (2003)
Issue (Month): 4 (October)
Pages: 923-944

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Handle: RePEc:ucp:jlabec:v:21:y:2003:i:4:p:923-944

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Web page: http://www.journals.uchicago.edu/JOLE/

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Cited by:
  1. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, Elsevier.
  2. Daniel, Rascher & John Paul, Solmes, 2007. "Do Fans Want Close Contests? A Test of the Uncertainty of Outcome Hypothesis in the National Basketball Association," MPRA Paper 25829, University Library of Munich, Germany.
  3. John D. Burger & Stephen J.K. Walters, 2006. "The Existence and Persistence of a Winner’s Curse: New Evidence from the (Baseball) Field," Working Papers 0625, International Association of Sports Economists & North American Association of Sports Economists.
  4. Cornaglia, Francesca & Feldman, Naomi E., 2011. "Productivity, Wages, and Marriage: The Case of Major League Baseball," IZA Discussion Papers 5695, Institute for the Study of Labor (IZA).
  5. Edward P. Lazear & Paul Oyer, 2007. "Personnel Economics," NBER Working Papers 13480, National Bureau of Economic Research, Inc.
  6. Peter Groothuis & Richard Hill & Timothy Perri, 2004. "Early Entry in the NBA Draft: The Influence of Unraveling, Human Capital and Option Value," Working Papers 04-05, Department of Economics, Appalachian State University, revised 2005.

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