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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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  • Stephen G. Bronars & Melissa Famulari, 2001. "Shareholder Wealth and Wages: Evidence for White-Collar Workers," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 328-354, April.
  • Handle: RePEc:ucp:jpolec:v:109:y:2001:i:2:p:328-354
    DOI: 10.1086/319551
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    Cited by:

    1. Pedro Martins, 2009. "Rent sharing before and after the wage bill," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2133-2151.
    2. Dobbelaere, Sabien & Mairesse, Jacques, 2018. "Comparing micro-evidence on rent sharing from two different econometric models," Labour Economics, Elsevier, vol. 52(C), pages 18-26.
    3. Martins, Pedro S. & Esteves, Luiz A., 2006. "Is There Rent Sharing in Developing Countries? Matched-Panel Evidence from Brazil," IZA Discussion Papers 2317, Institute of Labor Economics (IZA).
    4. Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2006. "Disentangling employment and wage rigidity," 2006 Meeting Papers 536, Society for Economic Dynamics.
    5. Claudio Michelacci & Vincenzo Quadrini, 2009. "Financial Markets and Wages," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 795-827.
    6. Lokshin, Boris & Mohnen, Pierre, 2013. "Do R&D tax incentives lead to higher wages for R&D workers? Evidence from The Netherlands," Research Policy, Elsevier, vol. 42(3), pages 823-830.
    7. Sabien Dobbelaere & Jacques Mairesse, 2010. "Comparing Micro-evidence on Rent Sharing from Three Different Approaches," NBER Working Papers 16220, National Bureau of Economic Research, Inc.
    8. Wenjing Duan & Pedro S. Martins, 2022. "Rent sharing in China: Magnitude, heterogeneity and drivers," British Journal of Industrial Relations, London School of Economics, vol. 60(1), pages 176-219, March.
    9. Kerndler, Martin, 2019. "Size and persistence matter: Wage and employment insurance at the micro level," ECON WPS - Working Papers in Economic Theory and Policy 04/2019, TU Wien, Institute of Statistics and Mathematical Methods in Economics, Economics Research Unit.
    10. Sumit K. Majumdar, 2011. "Cross Subsidization And Telecommunications Sector Wages," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 82(1), pages 1-24, March.
    11. Fathi Fakhfakh & Felix FitzRoy, 2004. "Basic Wages and Firm Characteristics: Rent Sharing in French Manufacturing," LABOUR, CEIS, vol. 18(4), pages 615-631, December.
    12. 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 Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 13(3b), pages 815-841.
    13. Guiso, Luigi & Pistaferri, Luigi & Schivardi, Fabiano, 2006. "Labour Adjustment: Disentangling Firing and Mobility Costs," CEPR Discussion Papers 5787, C.E.P.R. Discussion Papers.
    14. Lokshin, Boris & Mohnen, Pierre, 2008. "Wage effects of R&D tax incentives:Evidence from the Netherlands," MERIT Working Papers 2008-034, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    15. 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.
    16. Brian Bell & John Van Reenen, 2011. "Firm Performance and Wages: Evidence from Across the Corporate Hierarchy," CEP Discussion Papers dp1088, Centre for Economic Performance, LSE.

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