Do Employers Pay for Consistent Performance?: Evidence From the Nba
Year: 1998
Type: article
Abstract: In a world of uncertainty in which a worker's performance is variable over time and average performance is unknown when hiring, how will employers determine compensation? We develop a monitoring and signaling model where information is symmetric and parties are risk neutral. Monitoring costs increase with inconsistency, lowering pay for inconsistent workers. If discrimination exists, minority workers will be rewarded less than majority workers for improving consistency. Testing these and other predictions using National Basketball Association data, we find that consistent professional basketball players are paid more, but, in contrast to previous studies, there is no evidence of discrimination. (JEL J3, J7)
Source: Economic Inquiry
Authors: ÖRN B. BODVARSSON, RAYMOND T. BRASTOW
Institutions: St. Cloud State University, Longwood University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2051361470