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Interactions Between Workers and the Technology of Production: Evidence from Professional Baseball

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  • Gould, Eric D
  • Winter, Eyal

Abstract

This paper examines how the effort choices of workers within the same firm interact with each other. In contrast to the existing literature, we show that workers can affect the productivity of their co-workers based on income maximization considerations, rather than relying on behavioural considerations such as peer pressure, social norms, and shame. Theoretically, we show that a worker's effort has a positive effect on the effort of co-workers if they are complements in production, and a negative effect if they are substitutes. The theory is tested using panel data on the performance of baseball players from 1970 to 2003. The empirical analysis shows that a player's batting average significantly increases with the batting performance of his peers, but decreases with the quality of the team's pitching. Furthermore, a pitcher's performance increases with the pitching quality of his team-mates, but is unaffected by the batting output of the team. These results are inconsistent with behavioural explanations which predict that shirking by any kind of worker will increase shirking by all fellow workers. The results are consistent with the idea that the effort choices of workers interact in ways that are dependent on the technology of production. These findings are robust to controlling for individual fixed-effects, and to using changes in the composition of one's co-workers in order to produce exogenous variation in the performance of one's peers.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 6527.

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Date of creation: Oct 2007
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Handle: RePEc:cpr:ceprdp:6527

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Keywords: Externalities; Peer Effects; Team Production;

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References

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  1. Gould, Eric D & Lavy, Victor & Paserman, Marco Daniele, 2003. "Immigrating to Opportunity: Estimating the Effect of School Quality Using a Natural Experiment on Ethiopians in Israel," CEPR Discussion Papers 4052, C.E.P.R. Discussion Papers.
  2. Caroline Hoxby, 2000. "Peer Effects in the Classroom: Learning from Gender and Race Variation," NBER Working Papers 7867, National Bureau of Economic Research, Inc.
  3. Milgrom, P. & Shannon, C., 1991. "Monotone Comparative Statics," Papers 11, Stanford - Institute for Thoretical Economics.
  4. Kandel, E. & Lazear, E.P., 1990. "Peer Pressure and Partnerships," Papers 90-07, Rochester, Business - Managerial Economics Research Center.
  5. Eyal Winter, 2004. "Incentives and Discrimination," American Economic Review, American Economic Association, vol. 94(3), pages 764-773, June.
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  8. Zimmerman, David J., 1999. "Peer Effects in Academic Outcomes: Evidence From a Natural Experiment," Williams Project on the Economics of Higher Education DP-52, Department of Economics, Williams College.
  9. Eric D. Gould & Victor Lavy & M. Daniele Paserman, 2009. "Does Immigration Affect the Long-Term Educational Outcomes of Natives? Quasi-Experimental Evidence," Economic Journal, Royal Economic Society, vol. 119(540), pages 1243-1269, October.
  10. Åslund, Olof & Edin, Per-Anders & Fredriksson, Peter, 2001. "Ethnic Enclaves and the Economic Success of Immigrants - Evidence from a Natural Experiment," CEPR Discussion Papers 2729, C.E.P.R. Discussion Papers.
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  12. Todd D. Kendall, 2003. "Spillovers, Complementarities, and Sorting in Labor Markets with an Application to Professional Sports," Southern Economic Journal, Southern Economic Association, vol. 70(2), pages 389-402, October.
  13. Oreopoulos, Philip, 2007. "The Long-Run Consequences of Living in a Poor Neighborhood," Berkeley Program on Housing and Urban Policy, Working Paper Series qt9np9p7m5, Berkeley Program on Housing and Urban Policy.
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  15. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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  17. Alexandre Mas & Enrico Moretti, 2006. "Peers at Work," NBER Working Papers 12508, National Bureau of Economic Research, Inc.
  18. Edward E. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," Harvard Institute of Economic Research Working Papers 1738, Harvard - Institute of Economic Research.
  19. Eric A. Hanushek & John F. Kain & Steven G. Rivkin, 2002. "New Evidence about Brown v. Board of Education: The Complex Effects of School Racial Composition on Achievement," NBER Working Papers 8741, National Bureau of Economic Research, Inc.
  20. Joshua D. Angrist & Kevin Lang, 2004. "Does School Integration Generate Peer Effects? Evidence from Boston's Metco Program," American Economic Review, American Economic Association, vol. 94(5), pages 1613-1634, December.
  21. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," Journal of Law, Economics and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
  22. Bruce Sacerdote, 2001. "Peer Effects With Random Assignment: Results For Dartmouth Roommates," The Quarterly Journal of Economics, MIT Press, vol. 116(2), pages 681-704, May.
  23. Brian A. Jacob, 2004. "Public Housing, Housing Vouchers, and Student Achievement: Evidence from Public Housing Demolitions in Chicago," American Economic Review, American Economic Association, vol. 94(1), pages 233-258, March.
  24. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  25. Bruce A. Weinberg & Patricia B. Reagan & Jeffrey J. Yankow, 2004. "Do Neighborhoods Affect Hours Worked? Evidence from Longitudinal Data," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 891-924, October.
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Citations

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Cited by:
  1. Bryson, Alex & Gomez, Rafael & Papps, Kerry L., 2011. "Heterogeneous Worker Ability and Team-Based Production: Evidence from Major League Baseball, 1920-2009," CLSSRN working papers clsrn_admin-2011-6, Vancouver School of Economics, revised 29 Mar 2011.
  2. Qiang Fu & Changxia Ke & Fangfang Tan, 2013. ""Success breeds success" or "Pride goes before a fall"? Teams and Individuals in Best-of-Three Contests," Working Papers tax-mpg-rps-2013-06, Max Planck Institute for Tax Law and Public Finance.
  3. Sander Hoogendoorn & Simon C. Parker & Mirjam van Praag, 2014. "Ability Dispersion and Team Performance," Tinbergen Institute Discussion Papers 14-053/VII, Tinbergen Institute.
  4. Klor, Esteban F. & Kube, Sebastian & Winter, Eyal & Zultan, Ro’i, 2014. "Can higher rewards lead to less effort? Incentive reversal in teams," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 72-83.
  5. repec:dgr:uvatin:2012130 is not listed on IDEAS
  6. repec:lan:wpaper:3944 is not listed on IDEAS
  7. Hoogendoorn, Sander M. & Parker, Simon C. & van Praag, Mirjam, 2012. "Ability Dispersion and Team Performance: A Field Experiment," IZA Discussion Papers 7044, Institute for the Study of Labor (IZA).
  8. Thomas Cornelissen & Christian Dustmann & Uta Schönberg, 2013. "Peer Effects in the Workplace," CESifo Working Paper Series 4398, CESifo Group Munich.
  9. Simmons, Rob & Berri, David J., 2011. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Labour Economics, Elsevier, vol. 18(3), pages 381-388, June.
  10. Natalia Montinari, 2011. "The Dark Side of Reciprocity," Jena Economic Research Papers 2011-052, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  11. repec:lan:wpaper:3551 is not listed on IDEAS
  12. Gould, Eric D. & Kaplan, Todd R., 2011. "Learning unethical practices from a co-worker: The peer effect of Jose Canseco," Labour Economics, Elsevier, vol. 18(3), pages 338-348, June.
  13. Papps, Kerry L., 2010. "Productivity under Large Pay Increases: Evidence from Professional Baseball," IZA Discussion Papers 5133, Institute for the Study of Labor (IZA).
  14. repec:lan:wpaper:3659 is not listed on IDEAS
  15. R Simmons & D J Berri, 2010. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Working Papers 611523, Lancaster University Management School, Economics Department.

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