Using an Empirically Estimated Production Function for Major League Baseball to Examine Worker Disincentives Associated with Multi-Year Contracts

1997 ◽  
Vol 41 (2) ◽  
pp. 77-83 ◽  
Author(s):  
Mark D. Woolway
Keyword(s):  
Production Function ◽  
Major League Baseball ◽  
Returns To Scale ◽  
Job Security ◽  
Increasing Returns ◽  
Employee Productivity ◽  
Cross Sectional ◽  
Increasing Returns To Scale ◽  
Team Success ◽  
Major League

This paper uses cross-sectional data from the 1993 Major League Baseball season to derive the production function for the industry. Using that function, the hypothesis that employee productivity drops in response to the job security of a multi-year contract is test ed by comparing the marginal products of players in the year preceding and the year following the signing of a multi-year contract. I find that the production function for Major League Baseball exhibits increasing returns to scale and, contrary to the popular belief of observers of the sport, hitting is more important to team success than pitching. I also find compelling, statistically significant evidence of worker disincentives associated with multi-year contracts.

OPTIMAL ENDOGENOUS GROWTH WITH NATURAL RESOURCES: THEORY AND EVIDENCE

2016 ◽  
Vol 20 (8) ◽  
pp. 2173-2209 ◽  
Author(s):  
Manh-Hung Nguyen ◽  
Phu Nguyen-Van
Keyword(s):  
Growth Rate ◽  
Natural Resources ◽  
Endogenous Growth ◽  
Production Function ◽  
Returns To Scale ◽  
Direct Proof ◽  
Increasing Returns ◽  
Equilibrium Path ◽  
Exhaustible Resource ◽  
Increasing Returns To Scale

This paper considers an optimal endogenous growth model where the production function is assumed to exhibit increasing returns to scale and two types of resource (renewable and nonrenewable) are imperfect substitutes. Natural resources, labor, and physical capital are used in the final goods sector and in the accumulation of knowledge. Based on results in the calculus of variations, a direct proof of the existence of an optimal solution is provided. Analytical solutions for the planner case, balanced growth paths, and steady states are found for a specific CRRA utility and Cobb–Douglas production function. It is possible to have long-run growth where both energy resources are used simultaneously along the equilibrium path. As the law of motion of the technological change is not concave, reflecting the increasing returns to scale, so that the Arrow–Mangasarian sufficiency conditions do not apply, we provide a sufficient condition directly. Transitional dynamics to the steady state from the theoretical model are used to derive three convergence equations of output intensity growth rate, exhaustible resource growth rate, and renewable resource growth rate, which are tested based on OECD data on production and energy consumption.

scholarly journals Artificial increasing returns to scale and the problem of sampling from lognormals

2020 ◽  
pp. 239980832094236
Author(s):  
Andrés Gómez-Liévano ◽  
Vladislav Vysotsky ◽  
José Lobo
Keyword(s):  
Returns To Scale ◽  
Value Theory ◽  
Increasing Returns ◽  
Scaling Exponent ◽  
Analytical Prediction ◽  
Total Size ◽  
Cross Sectional ◽  
Increasing Returns To Scale ◽  
Positive Externalities ◽  
Urban Scaling

We show how increasing returns to scale in urban scaling can artificially emerge, systematically and predictably, without any sorting or positive externalities. We employ a model where individual productivities are independent and identically distributed lognormal random variables across all cities. We use extreme value theory to demonstrate analytically the paradoxical emergence of increasing returns to scale when the variance of log-productivity is larger than twice the log-size of the population size of the smallest city in a cross-sectional regression. Our contributions are to derive an analytical prediction for the artificial scaling exponent arising from this mechanism and to develop a simple statistical test to try to tell whether a given estimate is real or an artifact. Our analytical results are validated analyzing simulations and real microdata of wages across municipalities in Colombia. We show how an artificial scaling exponent emerges in the Colombian data when the sizes of random samples of workers per municipality are 1% or less of their total size.

scholarly journals The Economies Scale of Agricultural Product Processing Companies Listed on Stock Exchange in Hochiminh City and Hanoi, Vietnam

2022 ◽  
Author(s):  
Le Thanh Tung
Keyword(s):  
Panel Data ◽  
Production Function ◽  
Stock Exchange ◽  
Returns To Scale ◽  
Policy Implications ◽  
Increasing Returns ◽  
Ho Chi Minh City ◽  
Agricultural Product ◽  
Increasing Returns To Scale ◽  
Douglas Production Function

This study applied the Cobb-Douglas production function to identify economics efficiency of 18agricultural product processing companies listed on the Stock exchange in Ho Chi Minh City(HOSE) and Hanoi (HNX) in such sectors as fisheries, rubber and sugar in the period 2009-2013.The method employed FEM and REM models using panel data. The results showed thatperformance of all and each sector in this study has increasing returns to scale. In particular,firms in the sectors of fisheries and rubber primarily relied on raising capital to increasetheiroutput value, while those in the sugar sectormainly increase labors toimprove theiroutput value. Finally, the paper also provides some policy implications to improve theefficiency of capital and labor in the agricultural product processing companies.

scholarly journals Returns to Scale for EU Regions – evidence from the spatial panel model

2017 ◽  
Vol 3 (329) ◽  
Author(s):  
Alicja Anna Olejnik
Keyword(s):  
Fixed Effects ◽  
Regional Growth ◽  
Returns To Scale ◽  
Increasing Returns ◽  
Increasing Returns To Scale ◽  
Spatial Panel ◽  
Panel Model ◽  
Eu Regions ◽  
Spatial Panel Model ◽  
The Eu

Recent findings emphasise the importance of localised returns to scale for the regional growth as well as for the agglomeration processes. However, it is still not well established whether returns to scale are constant or increasing, and to what extent. Therefore, in this study we apply specification which describes the productivity growth with the growth of output through the Verdoorn’s law. This study aims to provide some new estimates of the degree of returns to scale for EU regions. Our findings show that the hypothesis of increasing returns to scale is still valid in today’s EU economy. To test the hypothesis, we have employed the Multidimensional Spatial Panel Durbin Model with Spatial Fixed Effects. The research is conducted for 261 regions of the EU 28. The paper concludes that increasing returns to scale in EU regions are substantial.

It’s a Party in the MLB: An Analysis of Shirking Between Games in Major League Baseball

2021 ◽  
pp. 1-11
Author(s):  
Richard J. Paulsen
Keyword(s):  
Moral Hazard ◽  
Inverse Relationship ◽  
Major League Baseball ◽  
Job Security ◽  
Baseball Player ◽  
Difference In Differences ◽  
Estimation Strategy ◽  
Major League ◽  
Triple Difference ◽  
And Performance

This paper uses game-level Major League Baseball data to identify whether players with greater job security shirk in their preparation between games. Past work has identified evidence of moral hazard arising in multiyear Major League Baseball player contracts, but little work has been done in identifying when shirking takes place. Using a difference-in-differences estimation strategy, this study finds evidence of an inverse relationship between the number of years remaining on player contracts and performance when the player is playing on short rest, when opportunity to rest is scarce, but not on long rest. Using a triple-difference specification, evidence is found that this inverse relationship between years remaining on a player’s contract when playing on short rest occurs for games played in “party cities.” This evidence would suggest that between game preparation is one avenue through which players on multiyear contracts shirk.

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