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Wage Dispersion and Team Performance - An Empirical Panel Analysis

  • Egon Franck

    ()

  • Stephan Nüesch

    ()

    (Institute for Strategy and Business Economics, University of Zurich
    Institute for Strategy and Business Economics, University of Zurich)

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.

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File URL: http://repec.business.uzh.ch/RePEc/iso/ISU_WPS/73_ISU_full.pdf
File Function: Revised version, October 2008
Download Restriction: no

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0073.

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Length: 25 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:iso:wpaper:0073
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