Wage dispersion and team performance: a theoretical model and evidence from baseball

Robert Breunig, Bronwyn Garrett-Rumba, Mathieu Jardin and Yvon Rocaboy
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Bronwyn Garrett-Rumba: RSSS - Research School of Social Sciences - ANU - Australian National University

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Abstract: We develop a general theoretical model of the effect of wage dispersion on team performance which nests two possibilities: wage inequality may have either negative or positive effects on team performance. A parameter which captures the marginal cost of effort, which we estimate using game-level data from Major League Baseball, determines whether wage dispersion and team performance are negatively or positively related. We find low marginal cost of effort; consequently, wage disparity is negatively related to team performance. Game and season-level regressions also indicate a negative relationship between inequality and performance. We discuss a variety of interpretations of our results.

Keywords: wage dispersion; labour economics; sports economics; baseball; ability; effort (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (14)

Published in Applied Economics, 2014, 46 (3), pp.271-281. ⟨10.1080/00036846.2013.839864⟩

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Journal Article: Wage dispersion and team performance: a theoretical model and evidence from baseball (2014)
Working Paper: Wage dispersion and team performance: a theoretical model and evidence from baseball (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00875499

DOI: 10.1080/00036846.2013.839864

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