Hierarchical Organization and Performance Inequality: Evidence from Professional Cycling

This paper proposes an equilibrium theory of the organization of work in an economy with an implicit market for productive time. In this market, agents buy or sell productive time. This implicit market gives rise to the formation of teams, organized in hierarchies with one leader (buyer) at the top and helpers (sellers) below. Relative to autarky, hierarchical organization leads to higher within and between team payo¤s/productivity inequality. This prediction is tested empir ically in the context of professional road cycling. We show that the observed rise in performance inequality in the peloton since the 1970s is merely due to a rise in help intensity within team and consistent with a change in the hierarchical organization of teams.