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Shareholder Wealth and Wages: Evidence for White-Collar Workers

Listed author(s):
  • Stephen G. Bronars
  • Melissa Famulari

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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File URL: http://dx.doi.org/10.1086/319551
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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
Contact details of provider: Web page: http://www.journals.uchicago.edu/JPE/

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  1. Hildreth, Andrew K G & Oswald, Andrew J, 1997. "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 318-337, April.
  2. Nickell, Stephen J & Wadhwani, Sushil, 1990. "Insider Forces and Wage Determination," Economic Journal, Royal Economic Society, vol. 100(401), pages 496-509, June.
  3. Currie, Janet & McConnell, Sheena, 1992. "Firm-Specific Determinants of the Real Wage," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 297-304, May.
  4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
  5. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
  6. Nickell, Stephen & Kong, Paul, 1992. "An investigation into the power of insiders in wage determination," European Economic Review, Elsevier, vol. 36(8), pages 1573-1599, December.
  7. Garen, John E, 1994. "Executive Compensation and Principal-Agent Theory," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1175-1199, December.
  8. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 227-251.
  9. Steven G. Allen, 1995. "Updated Notes on the Interindustry Wage Structure, 1890–1990," ILR Review, Cornell University, ILR School, vol. 48(2), pages 305-321, January.
  10. Holmlund, Bertil & Zetterberg, Johnny, 1991. "Insider effects in wage determination : Evidence from five countries," European Economic Review, Elsevier, vol. 35(5), pages 1009-1034, July.
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