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Compensating wage differentials: Evidence from the National Hockey League

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  • Kahane, Leo H.

Abstract

Using data for 1,471 unrestricted free agent player contracts in the NHL, this paper finds evidence that players are willing to sacrifice earnings to play on a higher quality team, and this tradeoff increases with player age. This result, which is consistent with the theory of compensating wage differentials, is robust to multiple specifications and estimation methodologies.

Suggested Citation

  • Kahane, Leo H., 2024. "Compensating wage differentials: Evidence from the National Hockey League," Economics Letters, Elsevier, vol. 241(C).
    • Handle: RePEc:eee:ecolet:v:241:y:2024:i:c:s016517652400315x
    DOI: 10.1016/j.econlet.2024.111831
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    References listed on IDEAS

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    5. Thomas Zimmerfaust, 2018. "Are Workers Willing To Pay To Join A Better Team?," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1278-1295, April.
    6. Marios Michaelides, 2010. "A New Test of Compensating Differences: Evidence on the Importance of Unobserved Heterogeneity," Journal of Sports Economics, , vol. 11(5), pages 475-495, October.
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    8. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692, Elsevier.
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    Cited by:

    1. Leo Kahane, 2026. "The Desire to Win: Compensating Wage Differentials in the NBA," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 52(2), pages 351-366, April.

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    More about this item

    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z21 - Other Special Topics - - Sports Economics - - - Industry Studies
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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