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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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    1. Arthur Lewbel, 2012. "Using Heteroscedasticity to Identify and Estimate Mismeasured and Endogenous Regressor Models," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 30(1), pages 67-80.
    2. Kurt Lavetti, 2023. "Compensating Wage Differentials in Labor Markets: Empirical Challenges and Applications," Journal of Economic Perspectives, American Economic Association, vol. 37(3), pages 189-212, Summer.
    3. 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.
    4. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    5. Kahn, Lawrence M, 1993. "Free Agency, Long-Term Contracts and Compensation in Major League Baseball: Estimates from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 157-164, February.
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    More about this item

    Keywords

    Compensating wage differentials; Labor markets; National Hockey League; Amenities;
    All these keywords.

    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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