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Productive Efficiency and Salary Distribution: The Case of US Major League Baseball
Author(s) -
Todd jewell R.,
Molina David J.
Publication year - 2004
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.0036-9292.2004.05101008.x
Subject(s) - salary , payroll , league , productivity , economics , inequality , panel data , revenue , labour economics , distribution (mathematics) , affect (linguistics) , demographic economics , econometrics , management , economic growth , psychology , finance , market economy , mathematics , mathematical analysis , physics , communication , astronomy
Recent theoretical research suggests that a firm's salary structure can affect the firm's productivity. We investigate the relationship between payroll inequality and production using US Major League Baseball data. Employing panel data methods, this study finds that salary inequality has a significantly negative effect on team success. A general result is that team success in term of wins does not seem to be correlated with efficiency; specifically, some of the least successful teams are also some of the most efficient. In addition, salary inequality does not appear to be correlated with efficiency. Furthermore, revenues generated by teams are not necessarily correlated with team efficiency.