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Pay and Performance

Author

Listed:
  • Lawrence Debrock

    (University of Illinois, Urbana—Champaign)

  • Wallace Hendricks

    (University of Illinois, Urbana—Champaign, wally-h@uiuc.edu)

  • Roger Koenker

    (University of Illinois, Urbana—Champaign)

Abstract

When we control for worker characteristics, we are able to directly test theories of efficiency wages and fairness. We find that high-quality workers continue to be associated with good outcomes. High-wage strategies are also associated with better won-lost performance and higher attendance figures. Conditioning on worker characteristics allows distinguishing wage dispersion that is “efficient†from wage dispersion around predicted wages. In baseball, it appears that the reason for observing the unconditional results of wage dispersion is that the best technology requires workers of similar quality. There is less support for wage “fairness†as an important consideration for firm outcomes.

Suggested Citation

  • Lawrence Debrock & Wallace Hendricks & Roger Koenker, 2004. "Pay and Performance," Journal of Sports Economics, , vol. 5(3), pages 243-261, August.
    • Handle: RePEc:sae:jospec:v:5:y:2004:i:3:p:243-261
    DOI: 10.1177/1527002503259337
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    References listed on IDEAS

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    Cited by:

    1. Robert Breunig & Bronwyn Garrett-Rumba & Mathieu Jardin & Yvon Rocaboy, 2014. "Wage dispersion and team performance: a theoretical model and evidence from baseball," Applied Economics, Taylor & Francis Journals, vol. 46(3), pages 271-281, January.
    2. Tao, Yu-Li & Chuang, Hwei-Lin & Lin, Eric S., 2016. "Compensation and performance in Major League Baseball: Evidence from salary dispersion and team performance," International Review of Economics & Finance, Elsevier, vol. 43(C), pages 151-159.
    3. Simmons, Rob & Berri, David J., 2011. "Mixing the princes and the paupers: Pay and performance in the National Basketball Association," Labour Economics, Elsevier, vol. 18(3), pages 381-388, June.
    4. Takuma Kamada & Hajime Katayama, 2014. "Team performance and within-team salary disparity: an analysis of nippon professional baseball," Economics Bulletin, AccessEcon, vol. 34(1), pages 144-151.
    5. Caruso, Raul & Carlo, Bellavite Pellegrini & Marco, Di Domizio, 2016. "Does diversity in the payroll affect soccer teams’ performance? Evidence from the Italian Serie A," MPRA Paper 75644, University Library of Munich, Germany.
    6. Annala, Christopher N. & Winfree, Jason, 2011. "Salary distribution and team performance in Major League Baseball," Sport Management Review, Elsevier, vol. 14(2), pages 167-175, May.
    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 - Working Papers del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    8. Anna Bykova & Dennis Coates, 2020. "Does Experience Matter? Salary Dispersion, Coaching, And Team Performance," Contemporary Economic Policy, Western Economic Association International, vol. 38(1), pages 188-205, January.
    9. Trevor Collier & Andrew L. Johnson & John Ruggiero, 2011. "Measuring Technical Efficiency in Sports," Journal of Sports Economics, , vol. 12(6), pages 579-598, December.
    10. Cheolbeom Park, 2023. "Optimal salary inequality for team performance: evidence from National Football League data," Applied Economics, Taylor & Francis Journals, vol. 55(24), pages 2773-2787, May.
    11. Anna Bykova & Dennis Coates, 2022. "Professional team sporting success: do economic and personal freedom provide competitive advantages?," Economics of Governance, Springer, vol. 23(3), pages 323-358, December.
    12. Jye-Shyan Wang & Chih-Fu Cheng & Wen-Jhan Jane, 2014. "Buying success or redistributing payment: bidirectional causality in Korean Professional Baseball League," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 4(2), pages 247-260, December.
    13. Hajime Katayama & Hudan Nuch, 2011. "A game-level analysis of salary dispersion and team performance in the national basketball association," Applied Economics, Taylor & Francis Journals, vol. 43(10), pages 1193-1207.
    14. Marco Di Domizio & Carlo Bellavite Pellegrini & Raul Caruso, 2022. "Payroll dispersion and performance in soccer: A seasonal perspective analysis for Italian Serie A (2007–2021)," Contemporary Economic Policy, Western Economic Association International, vol. 40(3), pages 513-525, July.
    15. Dennis Coates & Bernd Frick & Todd Jewell, 2016. "Superstar Salaries and Soccer Success," Journal of Sports Economics, , vol. 17(7), pages 716-735, October.
    16. Thadeu Gasparetto & Angel Barajas, 2022. "Wage Dispersion and Team Performance: The Moderation Role of Club Size," Journal of Sports Economics, , vol. 23(5), pages 548-566, June.

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