Section 26.1: Complementarity and Substitutability-- Definitions and Evidence
Core readings
Gould, Eric D. and Eyal Winter. “Interactions between workers and the technology of production: Evidence from professional baseball” The Review of Economics and Statistics, 91 (1) (2009), pp. 188–200
Argues that a worker's effort should have a positive effect on the effort of coworkers if they are complements in production, and a negative effect if they are substitutes. The theory is tested using a panel data set of baseball players from 1970 to 2003. The results are consistent with the idea that the effort choices of workers interact in ways that depend on the technology of production.
Azoulay, Pierre, Zivin, Joshua S. Graff, and Jilian Wang (2010): “Superstar Extinction”, Quarterly Journal of Economics, 125:2, 549-589.
Estimates the magnitude of spillovers generated by 112 academic “superstars” who died prematurely and unexpectedly as an exogenous source of variation in the structure of their collaborators' coauthorship networks. Following the death of a superstar, collaborators experience, on average, a lasting 5% to 8% decline in their quality-adjusted publication rates.
Waldinger, Fabian (2012): “Peer Effects in Science: Evidence from the Dismissal of Scientists in Nazi Germany”,Review of Economic Studies, 79, 838-861.
Analyses peer effects among university scientists. The usual endogeneity problems are addressed by using the dismissal of scientists by the Nazi government in 1933 as a source of exogenous variation. Constructs a new panel data set covering the universe of scientists at the German universities from 1925 to 1938 from historical sources. Finds that the departure of start scientists had no effects on the productivity of their peers.
Bartel, Ann P., Nancy D. Beaulieu, Ciaran S. Phibbs, and Patricia W. Stone. 2014. "Human Capital and Productivity in a Team Environment: Evidence from the Healthcare Sector." American Economic Journal: Applied Economics, 6(2): 231-59.
Estimates the productivity effects of human capital in a team production environment, using panel data from a large hospital system. Finds that greater qualifications and experience of registered nurses significantly improve patient outcomes. Disruptions to team functioning attributable to the departure of experienced nurses, the absorption of new hires, and the inclusion of temporary contract nurses are all associated with significant decreases in productivity beyond those attributable to changes in nurses' skill and experience.
Arcidiacono, Peter, Josh Kinsler Joseph Price (2017) “Productivity Spillovers in Team Production: Evidence from Professional Basketball”Journal of Labor Economics 35:1, 191-225.
Uses data from professional basketball to measure the importance of peers in productivity. Results show that productivity spillovers play an important role in team production. Despite this, players who make their teammates more productive are not rewarded: Player compensation is largely determined by own productivity, with little weight given to productivity spillovers.