ECON 2206 course project

3 Found helpful • 13 Pages • Essays / Projects • Year: Pre-2021

Introduction Given our modern economic climate, studies on wages and productivity have become increasingly important as employers seek to streamline their labour force and increase efficiency. Through their examinations, various researchers have noted a significant difference in the wages between married and unmarried men. This difference has been referred to as the “marriage premium”. The results of their studies have a variety of implications as understanding them can help provide insight into the work ethic between different employees or assist managers in providing wage equality. It is therefore important that we are able to identify what the main determinants of wages are so that the needs of employers and employees can be met. In this assignment, we will examine the issue of whether a marriage wage premium exists for professional athletes. Studies have been conducted to determine whether wage premiums for married relative to unmarried workers where it has been determined that there is a 10-40% difference in hourly wages. A more recent and influential study was conducted by Korenman and Neumark (1991) who found marriage premiums exist, however they did not include unobservable characteristics of productivity. This was explored in the Reed and Harford paper, which involved testing the compensating wages hypothesis which states that changing “tastes” caused by marriage contribute to wage premiums, rather than productivity changes. They found that marital status and higher productivity were unrelated and that it was rather from labour market substitutions of married men choosing less attractive jobs to gain more pecuniary benefits. In contrast, Becker (1981) hypothesised that marriage makes men more productive by providing opportunities for them to focus on building human capital and engaging in the labour force. Although there is great interest surrounding this topic, great difficulty surrounds our ability in obtaining productivity measures, as they tend to be unobservable. We will analyse professional athletes as data on productivity measures exist and are more readily quantified. The focus of this case study will be on players from the National Basketball Association (NBA) and address the following issues: 1. Do productivity measures differ by marital status? 2. Are married men paid more when controlling for productivity differences? The dataset NBASAL.dta has been used, which contains the following variables; marr, wage, exper, age, coll, games, minutes, guard, forward, center, points, rebounds, assists, draft, allstar, avgmin, lwage, black, children, expersq, agesq and marrblck.

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