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Salary distribution and team performance in Major League Baseball

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  • Christopher N. Annala
  • Jason Winfree

Abstract

This paper presents evidence that payroll inequality within a team is negatively related to on field performance, in terms of team winning percentages in Major League Baseball. This relationship is increasing over time during the sample period and robust to changes in the relationship between payroll and winning. We find strong evidence that, in levels, total team payroll and team specific Gini coefficients are nonstationary. The results also indicate that there exists a structural break in the relationship between payroll, inequality, and winning percent following the strike of 1994–1995.

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  • Christopher N. Annala & Jason Winfree, 2011. "Salary distribution and team performance in Major League Baseball," Sport Management Review, Taylor & Francis Journals, vol. 14(2), pages 167-175, April.
    • Handle: RePEc:taf:rsmrxx:v:14:y:2011:i:2:p:167-175
    DOI: 10.1016/j.smr.2010.08.002
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    7. Carlo Bellavite Pellegrini & Raul Caruso & Marco Di Domizio, 2021. "Relative wages, payroll structure and performance in soccer. Evidence from Italian Serie A (2007-2019)," DISCE - Quaderni del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
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