This paper uses matched employer-employee data for the Czech Republic to study the structure of managerial compensation. The evidence supports two key predictions from tournament theory. First, the managerial pay differential between organizational levels is non-decreasing as one goes up the corporate ladder. I document a particularly large increment of the pay differential at the top of a firm's hierarchy. Second, the winner's prize in the tournament increases with the number of competitors for the position of the top managers.
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Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number
wp262.