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Salary distribution and team performance in Major League Baseball

  • Annala, Christopher N.
  • Winfree, Jason

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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Article provided by Elsevier in its journal Sport Management Review.

Volume (Year): 14 (2011)
Issue (Month): 2 (May)
Pages: 167-175

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Handle: RePEc:eee:spomar:v:14:y:2011:i:2:p:167-175
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  1. R. Todd Jewell & Michael A. McPherson & David J. Molina, 2004. "Testing the Determinants of Income Distribution in Major League Baseball," Economic Inquiry, Western Economic Association International, vol. 42(3), pages 469-482, July.
  2. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  3. Arup Bose & Debashis Pal & David E. M. Sappington, 2010. "Equal Pay for Unequal Work: Limiting Sabotage in Teams," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(1), pages 25-53, 03.
  4. Frederick Wiseman & Sangit Chatterjee, 2003. "Team payroll and team performance in major league baseball: 1985-2002," Economics Bulletin, AccessEcon, vol. 1(2), pages 1-10.
  5. Stephen Hall & Stefan Szymanski & Andrew S. Zimbalist, 2002. "Testing the Causality between Team Performance and Payroll: The Cases of Major League Baseball and English Soccer," Journal of Sports Economics, , vol. 3(2), pages 149-168, May.
  6. DepkenII, Craig A., 2000. "Wage disparity and team productivity: evidence from major league baseball," Economics Letters, Elsevier, vol. 67(1), pages 87-92, April.
  7. Levine, David, 1989. "Cohesiveness, Productivity, and Wage Dispersion," Institute for Research on Labor and Employment, Working Paper Series qt8kd4d0p4, Institute of Industrial Relations, UC Berkeley.
  8. Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
  9. Donald Richards & Robert Guell, 1998. "Baseball success and the structure of salaries," Applied Economics Letters, Taylor & Francis Journals, vol. 5(5), pages 291-296.
  10. R. Todd jewell & David J. Molina, 2004. "Productive Efficiency and Salary Distribution: The Case of US Major League Baseball," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(1), pages 127-142, 02.
  11. repec:ebl:ecbull:v:1:y:2003:i:2:p:1-10 is not listed on IDEAS
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