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Salary disclosure and individual effort: Evidence from the National Hockey League

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  • Flynn, James

Abstract

In late January, 1990, the salary of every National Hockey League (NHL) player was suddenly disclosed, ending a decades-long culture of pay secrecy. I find that underpaid players respond to this new information by reallocating effort from defense to offense, which is more highly compensated within the league. Underpaid players begin scoring more, but allow their teams to get scored on by even more than the additional goals they provide. Asymmetrically, overpaid players do not become more defensive-minded. Consistent with reference-dependent utility theory, I find suggestive evidence that this shift is more pronounced for underpaid players who play for teams with higher overall payrolls, as these players likely have a larger discrepancy between their actual salary and their reference point.

Suggested Citation

  • Flynn, James, 2022. "Salary disclosure and individual effort: Evidence from the National Hockey League," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 471-497.
    • Handle: RePEc:eee:jeborg:v:202:y:2022:i:c:p:471-497
    DOI: 10.1016/j.jebo.2022.08.014
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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