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Mixing the princes and the paupers: Pay and performance in the National Basketball Association

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Author Info

  • Simmons, Rob
  • Berri, David J.

Abstract

We investigate how team and individual performances of players in the National Basketball Association respond to variations in intra-team pay inequality. By breaking down team dispersion into conditional and expected components, we find that expected pay dispersion has a positive effect on team and individual performance. We find that team and individual performances are essentially orthogonal to conditional pay inequality, counter to the hypotheses of fairness and cohesion proposed in the literature both for sports and general occupations. A change in collective bargaining regime in 1996 had little impact on either team or player productivity.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 3 (June)
Pages: 381-388

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Handle: RePEc:eee:labeco:v:18:y:2011:i:3:p:381-388

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Pay inequality Productivity Basketball;

References

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  12. Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
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  16. David J. Berri, 1999. "Who is 'most valuable'? Measuring the player's production of wins in the National Basketball Association," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 20(8), pages 411-427.
  17. Ronald G. Ehrenberg & Michael L. Bognanno, 1988. "Do Tournaments Have Incentive Effects?," NBER Working Papers 2638, National Bureau of Economic Research, Inc.
  18. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  19. Berri David J. & Schmidt Martin B. & Brook Stacey L., 2006. "Review of Wages of Wins: A Reply," Journal of Quantitative Analysis in Sports, De Gruyter, vol. 2(4), pages 1-12, October.
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  21. David Berri & R. Jewell, 2004. "Wage inequality and firm performance: Professional basketball's natural experiment," Atlantic Economic Journal, International Atlantic Economic Society, vol. 32(2), pages 130-139, June.
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Cited by:
  1. Berlinschi, Ruxanda & Schokkaert, Jeroen & Swinnen, Johan, 2013. "When drains and gains coincide: Migration and international football performance," Labour Economics, Elsevier, vol. 21(C), pages 1-14.
  2. Le Maux, Benoit & Rocaboy, Yvon, 2012. "A simple microfoundation for the utilization of fragmentation indexes to measure the performance of a team," Economics Letters, Elsevier, vol. 116(3), pages 491-493.
  3. Leif Brandes & Marc Brechot & Egon Franck, 2011. "The Temptation of Social Ties: When Interpersonal Network Transactions Hurt Firm Performance," Working Papers 00159, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2012.
  4. Robert Breunig & Bronwyn Garrett-Rumba & Mathieu Jardin & Yvon Rocaboy, 2012. "Wage dispersion and team performance: a theoretical model and evidence from baseball," CEPR Discussion Papers 663, Centre for Economic Policy Research, Research School of Economics, Australian National University.

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