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All our works are written to the highest level by the most competent and experienced writers, all works are unique and written by specially selected authors. All our works are written from scratch and are original. The impact of inequality on performance does not seem enormous. For example, a five percentage point increase in inequality for the team with median inequality would shift the team up 13 spots in the inequality ranking, but its performance ranking would drop by only 2 spots.
The coefficient on total payroll is positive and statistically significant. A one million dollar increase in total payroll is associated with about 0. This indicates that greater financial resources tend to improve performance. Adding payroll as an independent variable led to an increase in R-squared from about 0.
Finally, in specification 3 I include the logarithm of payroll instead of payroll. I want to verify that the result in specification 2 is robust to different functional forms. In addition, the effect of an additional one million dollars may be smaller for a team with a million payroll than for one with a 20 million payroll. Thus, including payroll in logarithm seems appropriate. The log of payroll is statistically significant.
A one percent increase in payroll is associated with about 0. Conclusion The analysis in this paper shows that pay inequality within MLB teams has a negative effect on performance. The effect remains statistically significant even after controlling for total payroll. The result is the same as that of DeBrock et al. My paper confirms their finding using the most recent data and using a different measure of pay inequality.
The fact that pay inequality leads to worse performance implies that managers should strive for pay equality in their teams. For example, instead of hiring two low-priced players and one superstar, performance may be better if three medium-priced players are hired. Given these results, it is surprising that there is not a more equal distribution of pay in baseball.
One possible explanation is that managers may care about attendance as well as winning. They may be willing to sign up an expensive superstar who will attract fans even though it will increase pay inequality and may hinder performance.
The conclusions above are subject to a number of limitations. First, it is unclear to what extent the results can be generalized to other sports. Each sport requires a different degree of cooperation among team members.
Therefore, the relationship between pay inequality and performance is likely to differ across sports. Second, the error terms for each team could be correlated over time.
For example, if a team wins a lot of games one year given its payroll and pay inequality, that team is likely to win a lot of games the next year as well. Therefore, the estimation procedure may need to correct for this autocorrelation.
Finally, there may be other variables that affect performance, e. Including these in the regression would increase the precision of my estimates as well as eliminate potential omitted variable bias.
The channels through which pay inequality affects performance are not clear. I can think of two possibilities. One is that pay inequality leads to tensions within the team and impairs performance.
The other possibility is that baseball requires players of similar quality. Pay inequality is probably associated with skill inequality, and it may be the skill inequality that drives down performance.
An excellent pitcher cannot win the game when the outfielders cannot catch or throw. It may be possible to distinguish these two channels empirically. Using statistics on individual player skill level, one could construct a measure of skill inequality for a team and include it as an additional control.
The coefficient on pay inequality in that case would capture the effect of pay inequality on performance while holding skill inequality constant. A negative impact of pay inequality would then support the idea that pay inequality leads to tensions which affect performance. This investigation, however, is left for future research.
The impact of salary distribution on firm-level outcomes in baseball. Journal of Sports Economics 5 August: Pay inequalities and team performance: Empirical evidence from the North American major leagues.
International Journal of Manpower Data with documentation and results: I am also grateful to many Union College students for their useful feedback. Sample Paper in Econometrics This is a sample research paper for an introductory course in econometrics. Introduction see example The Introduction should convey four things. First, what is the question that the paper asks.
Second, why is the question important. Third, how is the paper going to answer the question. Finally, how is the paper related to existing work. The introduction is the most important part of any paper. No one will continue to read any further if the introduction is confusing or poorly written. Data see example The Data section should accomplish three things: First, state the sources of data.
Second, discuss the variables used and how they relate to the concepts that they are supposed to measure. Empirical Results see example The Empirical Results section should present and discuss the empirical results.
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