Pay Dispersion and Work Performance

48 Pages Posted: 29 Feb 2012

See all articles by Alessandro Bucciol

Alessandro Bucciol

University of Verona - Department of Economics; Netspar

Marco Piovesan

University of Copenhagen - Department of Economics

Date Written: February 27, 2012


The effect of intra-firm pay dispersion on work performance is controversial and the empirical evidence is mixed. High pay dispersion may act as an extra incentive for employees’ effort or it may reduce motivation and team cohesiveness. These effects can also coexist and the prevalence of one effect over the other may depend on the use of different definitions of what constitutes a “team.” For this paper we collected a unique dataset from the men’s major soccer league in Italy. For each match we computed the exact pay dispersion of each work team and estimated its effect on team performance. Our results show that when the work team is considered to consist of only the players who contribute to the result, high pay dispersion has a detrimental impact on team performance. Several robustness checks confirm this result. In addition, we show that enlarging the definition of work team causes this effect to disappear or even become positive. Finally, we find that the detrimental effect of pay dispersion is due to worst individual performance, rather than a reduction of team cooperation.

Keywords: Team productivity, Incentives, Pay dispersion

JEL Classification: J31, J33, J44

Suggested Citation

Bucciol, Alessandro and Piovesan, Marco, Pay Dispersion and Work Performance (February 27, 2012). Harvard Business School Research Paper Series No. 12-075, Available at SSRN: or

Alessandro Bucciol

University of Verona - Department of Economics ( email )

Via Cantarane 24
Verona, 37129
+39 045.802.8278 (Phone)
+39 045.802.8529 (Fax)


Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE

Marco Piovesan (Contact Author)

University of Copenhagen - Department of Economics ( email )

Øster Farimagsgade 5
Bygning 26
1353 Copenhagen K.


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