Measuring and decomposing the distance to the Shapley wage function with limited data

Aguiar, Victor and Pongou, Roland and Tondji, Jean-Baptiste (2016): Measuring and decomposing the distance to the Shapley wage function with limited data. Forthcoming in:

Abstract

We study the Shapley wage function, a wage scheme in which a worker's pay depends both on the number of hours worked and on the output of the firm. We then provide a way to measure the distance of an arbitrary wage scheme to this function in limited datasets. In particular, for a fixed technology and a given supply of labor, this distance is additively decomposable into violations of the classical axioms of efficiency, equal treatment of identical workers, and marginality. The findings have testable implications for the different ways in which popular wage schemes violate basic properties of distributive justice in market organizations. Applications to the linear contract and to other well-known compensation schemes are shown.

• Item Type: MPRA Paper
• Language: English
• Keywords: Shapley wage function, firm, fairness violations, linear contract, bargaining, limited data
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C71 - Cooperative Games; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C78 - Bargaining Theory ; Matching Theory; D - Microeconomics > D2 - Production and Organizations > D20 - General; D - Microeconomics > D3 - Distribution > D30 - General; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J30 - General

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