IDEAS home Printed from
   My bibliography  Save this article

Learning from the Past: Trends in Executive Compensation over the 20th Century


  • Carola Frydman


In recent years, a large academic debate has tried to explain the rapid rise in CEO pay experienced over the past three decades. In this article, I review the main proposed theories, which span views of compensation as the result of a competitive labor market for executives to theories based on excess of managerial power. Some of these hypotheses have found support in cross-sectional evidence, but it has proven more difficult to determine which factors have caused the observed changes in pay over time. An alternative strategy is to evaluate the fit of plausible explanations out of sample by contrasting them with the evolution in executive pay and the market for managers during earlier time periods. A case study of General Electric suggests that evidence for earlier decades can speak of the recent trends and reveals the limitations of current explanations to address the long-run data. (JEL codes: G30, J33, M52, N82) Copyright The Author 2009. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email:, Oxford University Press.

Suggested Citation

  • Carola Frydman, 2009. "Learning from the Past: Trends in Executive Compensation over the 20th Century," CESifo Economic Studies, CESifo, vol. 55(3-4), pages 458-481.
  • Handle: RePEc:oup:cesifo:v:55:y:2009:i:3-4:p:458-481

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Knight, John & Yueh, Linda, 2004. "Job mobility of residents and migrants in urban China," Journal of Comparative Economics, Elsevier, vol. 32(4), pages 637-660, December.
    2. Meng, Xin & Kidd, Michael P., 1997. "Labor Market Reform and the Changing Structure of Wage Determination in China's State Sector during the 1980s," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 403-421, December.
    3. Wan, Guanghua, 2002. "Regression-based Inequality Decomposition: Pitfalls and a Solution Procedure," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
    4. Jonathan Morduch & Terry Sicular, 2002. "Rethinking Inequality Decomposition, With Evidence from Rural China," Economic Journal, Royal Economic Society, vol. 112(476), pages 93-106, January.
    5. John Knight & Lina Song, 2003. "Increasing urban wage inequality in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 11(4), pages 597-619, December.
    6. Bourguignon, Francois & Fournier, M & Gurgand, M, 2001. "Fast Development with a Stable Income Distribution: Taiwan, 1979-94," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(2), pages 139-163, June.
    7. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June.
    8. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 730-752, December.
    9. Xin Meng & Junsen Zhang & Pak-Wai Liu, 2000. "Sectoral gender wage differentials and discrimination in the transitional Chinese economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 13(2), pages 331-352.
    10. Knight, J. & Shi, L. & Renwei, Z., 1999. "A Spatial Analysis of Wages and Incomes in Urban China: Divergent Means, Convergent Inequality," Economics Series Working Papers 99209, University of Oxford, Department of Economics.
    11. Linda Y. Yueh, 2004. "Wage Reforms in China During the 1990s," Asian Economic Journal, East Asian Economic Association, vol. 18(2), pages 149-164, June.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Paula Faria & Franscisco Vitorino Martins & Elísio Brandão, 2013. "Executive Compensation: Pay-for-Performance in High-Technology Firms," FEP Working Papers 517, Universidade do Porto, Faculdade de Economia do Porto.
    2. El-Shagi Makram & Ilgmann Cordelius, 2010. "Die Bedeutung der Besitzverflechtung von Kapitalgesellschaften für die Finanzmarktkrise / The importance of mutual ownership for the genesis of financial crisis," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 61(1), pages 299-324, January.
    3. Paula Faria & Franscisco Vitorino Martins & Elísio Brandão, 2013. "The level of CEO compensation for the short and long-term - a view on high-tech firms," FEP Working Papers 519, Universidade do Porto, Faculdade de Economia do Porto.
    4. Paula Faria & Franscisco Vitorino Martins & Elísio Brandão, 2013. "CEO compensation in high-tech firms and changes in the SFAS No 123 (R)," FEP Working Papers 518, Universidade do Porto, Faculdade de Economia do Porto.
    5. Carlo Cambini & Sara De Masi & Laura Rondi, 2016. "CEO incentives in European energy utilities: evidence from regulated versus unregulated firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 43(2), pages 127-155, June.

    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:cesifo:v:55:y:2009:i:3-4:p:458-481. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.