Team effects on compensation: an application to salary determination in the National Hockey League

Abstract

Studies of salary determination largely model pay as a function of the attributes of the individual and the workplace (i.e., employer size, job characteristics, and so forth). This article empirically investigates an additional factor that may influence individual pay, specifically coworker productivity. Data from professional sports are used to evaluate this question because both salary and teammate performance measures are readily available. We find that team attributes have both direct effects on an individual's pay, and indirect effects through altering the rates at which individual player productive characteristics are valued.