Wage disparity and team productivity: Evidence from major league baseball

Abstract

Using data describing baseball teams from 1985 to 1998, it is found that Levine's [Levine, D.I., 1991. Cohesiveness, productivity and wage dispersion. Journal of Economic Behavior and Organization 15, 237-255] team-cohesiveness hypothesis is supported over Ramaswamy and Rowthorn's [Ramaswamy, R., Rowthorn, E., 1991. Efficiency wages and dispersion. Economica 58, 501-514] danger-potential hypothesis. The implication is that teams with greater wage disparity experience a reduction in team performance. © Elsevier Science S.A.