The Effect of the Initial Distribution of Labor-Related Property Rights on the Allocative Efficiency of Labor Markets

37 Pages Posted: 23 Jan 2023

See all articles by Helmut M. Dietl

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

Markus Lang

University of Lausanne

Johannes Orlowski

University of Zurich - Department of Business Administration (IBW)

Philipp Wegelin

Lucerne University of Applied Sciences and Arts - School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: January 19, 2023

Abstract

We conduct an empirical study to examine the impact of the initial distribution of labor-related property rights on the allocative efficiency of labor markets for skilled workers in a highly competitive labor market (professional basketball). Specifically, we compare a regime where employers can trade workers to other employers without the worker's consent to one where workers have the right to negotiate freely with other employers and move without their employer's consent. Our results indicate that contrary to the predictions of the Coase Theorem, allocative efficiency decreases when workers have the initial right to negotiate freely and move to another employer.

Keywords: Coase theorem, labor market, allocative efficiency, productivity, sports as a lab

JEL Classification: E24, J01, J21, L83

Suggested Citation

Dietl, Helmut M. and Lang, Markus and Orlowski, Johannes and Wegelin, Philipp, The Effect of the Initial Distribution of Labor-Related Property Rights on the Allocative Efficiency of Labor Markets (January 19, 2023). Available at SSRN: https://ssrn.com/abstract=4331578 or http://dx.doi.org/10.2139/ssrn.4331578

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

Markus Lang (Contact Author)

University of Lausanne ( email )

Quartier UNIL-Centre
Synathlon
Lausanne, 1015
Switzerland

Johannes Orlowski

University of Zurich - Department of Business Administration (IBW) ( email )

Philipp Wegelin

Lucerne University of Applied Sciences and Arts - School of Business ( email )

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