• DOI:10.1111/ecin.12543
• Corpus ID: 18332684

Are Workers Willing to Pay to Join a Better Team?

@article{Zimmerfaust2018AreWW,
  title={Are Workers Willing to Pay to Join a Better Team?},
  author={Thomas Zimmerfaust},
  journal={Wiley-Blackwell: Economic Inquiry},
  year={2018}
}

• Thomas Zimmerfaust
• Published 1 April 2018
• Economics, Business
• Wiley-Blackwell: Economic Inquiry

Using data from the Major League Baseball free‐agent market, this study is the first to show that the productivity expected of the team a worker will join produces a significant, negative compensating wage differential. The younger workers in the sample drive this result, trading 25% of their wages to join teams with an expected productivity one standard deviation higher. This investment can be recouped if a reasonable increase in human capital occurs. These results are robust to contract length‐wage simultaneity and indicate that investment in human capital motivates the observed tradeoff, suggesting a new pathway through which human capital accumulation can affect wages. Reliable measures of workers' own past productivity and the productivity expected of a worker's future team provide key advantages to identifying these effects. (JEL J31, J24, M54)