Coupé, Tom () (EERC, Kiev) Smeets, Valerie () (Department of Economics, Aarhus School of Business) Warzynski, Frederic () (Department of Economics, Aarhus School of Business)
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Existing tests of tournament theory have recently been criticized
for their failure to distinguish tournaments from other theories that
have similar effects like standards and marginal productivity theory
(Gibbs, 1994, 1996; Prendergast, 1999). In this paper, we propose a
series of empirical tests that allow to make this distinction. We use
a dataset of average wages by rank in US economic departments over
the period 1977-1997 and link this information to individual production
data to test whether wage gaps affect the productivity and cooperative
behavior of economists and to control for marginal productivity theory.
We find that the wage gap is increasing along the hierarchy, even when
controlling for production by rank. Moreover, wages are more sensitive
to productivity for higher ranks. We find some evidence that higher
wage gaps lead to higher productivity but not that wage gaps depend
on the number of contestants nor that they lead to less cooperation.
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Paper provided by University of Aarhus, Aarhus School of Business, Department of Economics in its series Working Papers with number
03-25.
Find related papers by JEL classification: J00 - Labor and Demographic Economics - - General - - - General M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
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