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CEO Pay Disclosure and Within-Firm Wage Inequality

Author

Listed:
  • Maida, Agata

    (Università degli Studi di Milano)

  • Pezone, Vincenzo

    (Tilburg University)

Abstract

We analyze the effect of CEO pay disclosure on wage distribution by exploiting a 1998 reform requiring Italian publicly listed companies to disclose top executives' compensation. In firms where CEOs disclose high total compensation, the top 5 percent and 1 percent of the within-firm wage distribution rise substantially. Instead, the effect on average wages is small and only marginally significant. As a result, wage inequality increases. These effects are stronger for workers with low experience or located in the main region of the firm's operations. Moreover, they are driven by changes in workers' bargaining power, rather than by sorting.

Suggested Citation

  • Maida, Agata & Pezone, Vincenzo, 2024. "CEO Pay Disclosure and Within-Firm Wage Inequality," IZA Discussion Papers 17243, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp17243
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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