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| Myrna Wooders and Edward Cartwright |
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| ''On the theory of equalizing differences Increasing abundances of types of workers may increase their earnings'' |
| ( 2001, Vol. 4 No.4 ) |
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| The theory of equalising differences recognises that wage differentials may be required to equalise the attractiveness of alternative occupations. We examine this theory using the Conley/Wooders 'crowding types'' model. The crowding types model distinguishes between the tastes of a player and his crowding type, those attributes of the player that directly effect the well-being of other players in the same club - a player''s skill, productivity or personality are examples. A club can be interpreted as firm in which the job attributes are the club goods thus, the crowding types model, with its distinction between tastes and crowding types, provides a natural environment in which to study equalising differences. In contrast to results for earlier models, we demonstrate that even when small groups of players are strictly effective in a strong sense, an increase in the abundance of players of one crowding type can increase the core payoffs to players of that crowding type. |
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| Keywords: cooperative game theory |
JEL: D4 - Market Structure and Pricing: General
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| Manuscript Received : May 07 2001 | | Manuscript Accepted : May 08 2001 |
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