Proceedings of The 4th International Conference on Management, Economics and Finance
Differences in wages, team performance, and measures of dispersion
Daniel Philipp Schettler
The effect of wage dispersion on performance is an often-discussed topic in compensation research. Debates over the influence of differences in wages on performance are ongoing. The majority of the literature uses only one measure of disparity. With the indicators, the distribution of wages is measured. One study reports differing findings, using more than one measure for the differences in wages.
This conference paper focuses on the most popular measures for wage dispersion. Substantial literature favors a few indicators to measure differences in wages. This paper will measure wage dispersion with three dimensions: the Coefficient of variation, the Gini coefficient, and Theil’s measure.
Many researchers use a sports data set when investigating the effects of wage dispersion. Because professional sports offers multiple advantages, as performance is relatively easy to measure, published in detail, and often publicly disclosed. This paper will also make use of data from a sports setting. The data was collected to evaluate the 2. Bundesliga, the second-highest league in German football.
A proven team performance model was taken from the literature, and with a standard OLS regression (ordinary least squares), the paper investigates if differences in the outcome appear with different measures of dispersion. Regression output shows that all used measures of dispersion show a significant positive influence of wage dispersion on team performance.
keywords: wage dispersion, performance, compensation.