Optimal salary inequality for team performance: evidence from National Football League data

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1 Citation (Scopus)

Abstract

Using salary data for players in the National Football League, I examine empirically the relationship between salary inequality and team performance under dynamic panel regressions. Main findings are: 1) the relationship between salary inequality and team performance is robustly hump-shaped, 2) the optimal Gini index to maximize the number of wins in a regular season is approximately 0.71 from estimates with all players’ salary data and ranges between 0.52 and 0.56 with players on rosters. These results imply that neither perfect equality nor perfect inequality in salary distribution is beneficial to team performance.

Original languageEnglish
Pages (from-to)2773-2787
Number of pages15
JournalApplied Economics
Volume55
Issue number24
DOIs
Publication statusPublished - 2023

Bibliographical note

Funding Information:
The work was supported by the Korea University Research Grant [K2104681]. I am grateful to two anonymous referees, Chirok Han, Kanghyock Koh, Suyong Song and seminar participants at Korea University for helpful comments and discussion. I also thank Jinwoong Lee and Jinbaek Park for research assistance. The usual disclaimers apply.

Publisher Copyright:
© 2022 Informa UK Limited, trading as Taylor & Francis Group.

Keywords

  • Dynamic panel regression
  • Gini index
  • NFL
  • inequality
  • team performance

ASJC Scopus subject areas

  • Economics and Econometrics

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