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Shareholder Wealth and Wages: Evidence for White-Collar Workers

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  • Stephen G. Bronars
  • Melissa Famulari

Abstract

We present empirical evidence on the relationship between individual wages, conditional on worker characteristics, and equity returns using a unique survey from the Bureau of Labor Statistics. Equity returns affect the wages only of workers with three or more years of tenure. A 4 percent increase in a firm's market value raises pay by 0.3 percent within three years. Our estimates suggest that each $10 increase in shareholder wealth raises the present value of a firm's wage bill by $1. The elasticity of white-collar wages with respect to equity returns is one-third smaller than the CEO salary elasticities in our sample.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 109 (2001)
Issue (Month): 2 (April)
Pages: 328-354

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Handle: RePEc:ucp:jpolec:v:109:y:2001:i:2:p:328-354

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Web page: http://www.journals.uchicago.edu/JPE/

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Cited by:
  1. Pedro S. Martins, 2004. "Rent Sharing Before and After the Wage Bill," Discussion Paper Series, Department of Economics 200405, Department of Economics, University of St. Andrews.
  2. Martins, Pedro S. & Esteves, Luiz A., 2006. "Is There Rent Sharing in Developing Countries? Matched-Panel Evidence from Brazil," IZA Discussion Papers 2317, Institute for the Study of Labor (IZA).
  3. Pedro S. Martins & Luiz A. Esteves, 2012. "Wages and Profits in Manufacturing Firms: Matched-Panel Evidence from Brazil," Economia, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 13(3b), pages 815_841.
  4. Majumdar, Sumit K., 2010. "Institutional changes, firm size and wages in the telecommunications sector," Information Economics and Policy, Elsevier, vol. 22(3), pages 201-217, July.
  5. Claudio Michelacci & Vincenzo Quadrini, 2005. "Financial Markets and Wages," NBER Working Papers 11050, National Bureau of Economic Research, Inc.
  6. repec:dgr:unumer:2012058 is not listed on IDEAS
  7. Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2007. "Labor Adjustment: Disentangling Firing and Mobility Costs," Economics Working Papers ECO2007/44, European University Institute.
  8. Lokshin, Boris & Mohnen, Pierre, 2008. "Wage effects of R&D tax incentives:Evidence from the Netherlands," MERIT Working Papers 034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  9. Lokshin, Boris & Mohnen, Pierre, 2012. "Do R&D tax incentives lead to higher wages for R&D workers? Evidence from the Netherlands," MERIT Working Papers 058, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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