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Wage Dispersion and Team Performance - An Empirical Panel Analysis

Egon Franck and Stephan Nuesch

No 73, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: The impact of intra-team pay dispersion on team productivity is a highly discussed issue. On one hand, wage differentials provide incentives for higher employee effort. On the other hand, pay inequality discourages cooperation among team members, which reduces performance. Analyzing non-linear effects of wage dispersion in professional team sports, we find empirical evidence that an initial increase of intra-team inequity reduces team performance, but at some point the relation reverses. In addition, we show that the pay structure of a team clearly affects the teamÕs playing style.

Keywords: wage dispersion; team performance; relative deprivation; tournament theory (search for similar items in EconPapers)
JEL-codes: D31 L83 M52 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007
New Economics Papers: this item is included in nep-bec, nep-lab and nep-spo
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Citations: View citations in EconPapers (5)

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http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/73_ISU_full.pdf Revised version, October 2008 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:iso:wpaper:0073

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