Salary Inequality, Team Success, League Policies, and the Superstar Effect

15 Pages Posted: 27 Nov 2017

Date Written: January 2018

Abstract

Using a simple model of a team's salary distribution and data from the recent Collective Bargaining Agreement between players and owners in the National Hockey League, I examine the relationship between a team's salary distribution and its winning percentage. I find that teams with higher relative payrolls and lower salary inequality have higher winning percentages. I also find evidence of a superstar effect, in that teams with a higher maximum player salary have higher winning percentages. The results are sensitive, however, to the particular measure of salary inequality used as well as the endogeneity of the salary distribution.

JEL Classification: Z22, L83, J52, C33, C26

Suggested Citation

Cyrenne, Philippe, Salary Inequality, Team Success, League Policies, and the Superstar Effect (January 2018). Contemporary Economic Policy, Vol. 36, Issue 1, pp. 200-214, 2018, Available at SSRN: https://ssrn.com/abstract=3076623 or http://dx.doi.org/10.1111/coep.12217

Philippe Cyrenne (Contact Author)

University of Winnipeg ( email )

Winnipeg, Manitoba R3B 2E9
Canada

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