Dynasty discount: inter-team differentials in NHL player compensation

In the past few years, a lot of work has been done to study the effect of firms in wage determination. In fact, firms have been found to contribute a great deal to intra-industry wage differentials. This paper converts this firm effect into a team effect using NHL player and team data and tries to find inter-team differences in NHL player compensation. Using information from various sources, an analysis of player salaries for the period 1998-2004 is done using a standard wage regression with fixed player and team effects. What we find is that in the NHL industry, we observe team effects to be an insignificant component of player compensation. More so, the teams with statistically significant team effects exhibit characteristics often associated with dynasties.