Productive Efficiency and Salary Distribution: The Case of U.S. Major League Baseball

16 Pages Posted: 13 Apr 2004  

R. Todd Jewell

Texas State University, San Marcos - Department of Finance and Economics

David Molina

University of North Texas - Department of Economics

Abstract

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.

Suggested Citation

Jewell, R. Todd and Molina, David, Productive Efficiency and Salary Distribution: The Case of U.S. Major League Baseball. Scottish Journal of Political Economy, Vol. 51, pp. 127-142, February 2004. Available at SSRN: https://ssrn.com/abstract=514016

R. Todd Todd Jewell (Contact Author)

Texas State University, San Marcos - Department of Finance and Economics ( email )

San Marcos, TX 78666
United States

David Molina

University of North Texas - Department of Economics ( email )

Denton, TX 76203-1457
United States

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