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Executive compensation and worker wages during the global trade collapse: Evidence from Japanese firms

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  • Hiroyuki Kuwahata
  • Eiichi Tomiura

Abstract

Widening income inequality is a serious social concern in many countries. We examine the causal effect of a negative demand shock on executive compensation and worker wages using a quasi-natural experiment, considering Japanese firms that experienced a sudden and substantial export decline following the global financial crisis in the late 2000s. Worker wages tended to decline significantly more relative to executive compensation after the crisis in firms depending more on exports, causing a wider pay differential. We establish the robustness of our difference-in-difference results by considering selection into exporters, excluding sporadic exporters, and controlling for foreign ownership or liquidity.

Suggested Citation

  • Hiroyuki Kuwahata & Eiichi Tomiura, 2025. "Executive compensation and worker wages during the global trade collapse: Evidence from Japanese firms," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 34(8), pages 1893-1910, November.
    • Handle: RePEc:taf:jitecd:v:34:y:2025:i:8:p:1893-1910
    DOI: 10.1080/09638199.2024.2396929
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