A game-level analysis of salary dispersion and team performance in the national basketball association

Abstract

Using game-level panel data on the National Basketball Association (NBA), we examine the causal effect of within-team salary dispersion on team performance. We exploit three measures of salary dispersion and examine the effect at three levels: whether the outcome of the game is influenced by salary dispersion among (1) players participating in the current game (active players), (2) players who played more than half of their team's games in a season (regular and occasional players) and (3) the entire player population. Regardless of the measures used, we find that salary dispersion does not influence team performance.