Spillovers and Substitutability in Production

31 Pages Posted: 21 May 2019

See all articles by Kerry L. Papps

Kerry L. Papps

Cornell University; IZA Institute of Labor Economics

Alex Bryson

UCL; National Institute of Economic and Social Research (NIESR)

Abstract

Can the existence of positive productivity spillovers between co-workers be explained by the presence of complementarities in a firm's production function? A simple model demonstrates that this is possible when workers perform their tasks sequentially and part of individuals' pay is determined by the firm's output, but also that negative spillovers may arise when workers can raise overall output unilaterally. Data from major league baseball support these predictions. They show that the pairs of players who are most complementary in the production process exert the largest positive spillovers on each other, but that negative spillovers predominate between all player pairs.

Keywords: spillovers, teams, substitutes, complements, baseball

JEL Classification: D24, J24, L23, M52

Suggested Citation

Papps, Kerry L. and Bryson, Alex, Spillovers and Substitutability in Production. IZA Discussion Paper No. 12252. Available at SSRN: https://ssrn.com/abstract=3390242

Kerry L. Papps (Contact Author)

Cornell University ( email )

Ithaca, NY 14853
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Alex Bryson

UCL ( email )

20 Bedford Way
London, WC1H 0AL
United Kingdom

National Institute of Economic and Social Research (NIESR) ( email )

2 Dean Trench Street
Smith Square
London, SW1P 3HE
United Kingdom

HOME PAGE: http://www.niesr.ac.uk/staff/staffdetail.php?StaffID=307

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