IDEAS home Printed from https://ideas.repec.org/p/nip/nipewp/2-2009.html
   My bibliography  Save this paper

Managers and wage policies

Author

Listed:

Abstract

We investigate the effects of individual top managers on wages and wage policies. A large longitudinal administrative dataset from Portugal allows us to match workers,firms and top managers, and follow the movements of the latter across different firms over time. We estimate the role of top manager fixed-effects in determining wages and wage policies, while also accounting for the effect of worker and firm heterogeneity. Our results reveal that top managers have a significant influence on wages, the returns to schooling and tenure, the gender wage gap, and the extent of rent sharing. Further-more, they point to the existence of managerial styles in the setting of wage policies. Finally, we relate worker compensation to observable managerial attributes, and find that returns to schooling tend to be higher in firms led by more educated top executives, while longer-tenured managers appear on average to engage in more rent sharing.

Suggested Citation

  • Natália P. Monteiro & Paulo Bastos, 2009. "Managers and wage policies," NIPE Working Papers 2/2009, NIPE - Universidade do Minho.
  • Handle: RePEc:nip:nipewp:2/2009
    as

    Download full text from publisher

    File URL: http://www3.eeg.uminho.pt/economia/nipe/docs/2009/NIPE_WP_2_2009.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Cardoso, Ana Rute, 2004. "Wage Mobility: Do Institutions Make a Difference? A Replication Study Comparing Portugal and the UK," IZA Discussion Papers 1086, Institute of Labor Economics (IZA).
    2. Bastos, Paulo & Monteiro, Natália P. & Straume, Odd Rune, 2009. "Firm heterogeneity and wages in unionised labour markets: Theory and evidence," Labour Economics, Elsevier, vol. 16(4), pages 440-450, August.
    3. Martyn Andrews & Thorsten Schank & Richard Upward, 2006. "Practical fixed-effects estimation methods for the three-way error-components model," Stata Journal, StataCorp LP, vol. 6(4), pages 461-481, December.
    4. Rosa-Branca Esteves, 2014. "Price Discrimination with Private and Imperfect Information," Scandinavian Journal of Economics, Wiley Blackwell, vol. 116(3), pages 766-796, July.
    5. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics," Introductory Chapters, in: Robert Gibbons & John Roberts (ed.),The Handbook of Organizational Economics, Princeton University Press.
    6. Fernando Alexandre & Pedro Bação & Vasco Gabriel, 2008. "Taylor-type rules versus optimal policy in a Markov-switching economy," GEMF Working Papers 2008-02, GEMF, Faculty of Economics, University of Coimbra.
    7. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 49-100.
    8. Gabriel, Vasco J. & Levine, Paul & Spencer, Christopher, 2009. "How forward-looking is the Fed? Direct estimates from a 'Calvo-type' rule," Economics Letters, Elsevier, vol. 104(2), pages 92-95, August.
    9. Ana Rute Cardoso & Rudolf Winter-Ebmer, 2007. "Mentoring and Segregation: Female-Led Firms and Gender Wage Policies," Economics working papers 2007-20, Department of Economics, Johannes Kepler University Linz, Austria.
    10. Esteves, Rosa-Branca, 2009. "Price discrimination with partial information: Does it pay off?," Economics Letters, Elsevier, vol. 105(1), pages 28-31, October.
    11. Cristina Amado & Timo Teräsvirta, 2008. "Modelling Conditional and Unconditional Heteroskedasticity with Smoothly Time-Varying Structure," NIPE Working Papers 03/2008, NIPE - Universidade do Minho.
    12. Delfim Gomes Neto & Francisco José Veiga, 2008. "Financial globalization, convergence and growth," NIPE Working Papers 07/2008, NIPE - Universidade do Minho.
    13. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1351-1408.
    14. Cuñat, Vicente & Guadalupe, Maria, 2006. "Globalization and the Provision of Incentives Inside the Firm," CEPR Discussion Papers 5950, C.E.P.R. Discussion Papers.
    15. Marko Tervio, 2008. "The Difference That CEOs Make: An Assignment Model Approach," American Economic Review, American Economic Association, vol. 98(3), pages 642-668, June.
    16. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(2), pages 444-469, June.
    17. Kurt R. Brekke & Roberto Cellini & Luigi Siciliani & Odd Rune Straume, 2008. "Competition and quality in regulated markets: a differential-game approach," Discussion Papers 08/05, Department of Economics, University of York.
    18. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    19. Antonio Afonso & Ricardo Sousa, 2011. "Assessing long-term fiscal developments: evidence from Portugal," Applied Economics Letters, Taylor & Francis Journals, vol. 18(1), pages 1-5.
    20. I. Sebastian Buhai & Miguel A. Portela & Coen N. Teulings & Aico van Vuuren, 2014. "Returns to Tenure or Seniority?," Econometrica, Econometric Society, vol. 82(2), pages 705-730, March.
    21. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2011. "Mergers and capital flight in unionised oligopolies: Is there scope for a "national champion" policy?," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 325-341, April.
    22. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    23. Marianne Bertrand & Antoinette Schoar, 2003. "Managing with Style: The Effect of Managers on Firm Policies," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1169-1208.
    24. John M. Abowd & Francis Kramarz & Sébastien Roux, 2006. "Wages, Mobility and Firm Performance: Advantages and Insights from Using Matched Worker-Firm Data," Economic Journal, Royal Economic Society, vol. 116(512), pages 245-285, June.
    25. Fernando Alexandre & Miguel Portela & Carla Sá, 2008. "Admission conditions and graduates' employability," NIPE Working Papers 16/2008, NIPE - Universidade do Minho.
    26. Murphy, Kevin J., 1999. "Executive compensation," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 38, pages 2485-2563, Elsevier.
    27. Ana Rute Cardoso & Pedro Portugal, 2005. "Contractual Wages and the Wage Cushion under Different Bargaining Settings," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 875-902, October.
    28. Kevin J. Murphy & Ján Zábojník, 2004. "CEO Pay and Appointments: A Market-Based Explanation for Recent Trends," American Economic Review, American Economic Association, vol. 94(2), pages 192-196, May.
    29. João Cerejeira Silva, 2008. "Young Employment, Job-Skill Composition and Minimum Wages: Evidence from a 'Natural Experiment'," NIPE Working Papers 04/2008, NIPE - Universidade do Minho.
    30. Cornelissen, Thomas & Hübler, Olaf, 2007. "Unobserved Individual and Firm Heterogeneity in Wage and Tenure Functions: Evidence from German Linked Employer-Employee Data," IZA Discussion Papers 2741, Institute of Labor Economics (IZA).
    31. Luís Aguiar-Conraria & Pedro Magalhães, 2010. "Referendum design, quorum rules and turnout," Public Choice, Springer, vol. 144(1), pages 63-81, July.
    32. Carl M. Campbell III & Kunal S. Kamlani, 1997. "The Reasons for Wage Rigidity: Evidence from a Survey of Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 759-789.
    33. Cardoso, Ana Rute, 2006. "Wage mobility: do institutions make a difference?," Labour Economics, Elsevier, vol. 13(3), pages 387-404, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Vera Brenčič, 2015. "Employers' Efforts to Deter Shirking in Teams: Evidence from Job Vacancies," LABOUR, CEIS, vol. 29(1), pages 52-78, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexandre, Fernando & Portela, Miguel & Sá, Carla, 2008. "Admission Conditions and Graduates' Employability," IZA Discussion Papers 3530, Institute of Labor Economics (IZA).
    2. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    3. Mion, Giordano & Opromolla, Luca David, 2014. "Managers' mobility, trade performance, and wages," Journal of International Economics, Elsevier, vol. 94(1), pages 85-101.
    4. Oriana Bandiera & Luigi Guiso & Andrea Prat & Raffaella Sadun, 2015. "Matching Firms, Managers, and Incentives," Journal of Labor Economics, University of Chicago Press, vol. 33(3), pages 623-681.
    5. Custódio, Cláudia & Ferreira, Miguel A. & Matos, Pedro, 2013. "Generalists versus specialists: Lifetime work experience and chief executive officer pay," Journal of Financial Economics, Elsevier, vol. 108(2), pages 471-492.
    6. Peter Cziraki & Dirk Jenter, 2021. "The Market for CEOs," CESifo Working Paper Series 9143, CESifo.
    7. Eisfeldt, Andrea L. & Kuhnen, Camelia M., 2013. "CEO turnover in a competitive assignment framework," Journal of Financial Economics, Elsevier, vol. 109(2), pages 351-372.
    8. Alex Edmans & Xavier Gabaix & Augustin Landier, 2007. "A Calibratable Model of Optimal CEO Incentives in Market Equilibrium," NBER Working Papers 13372, National Bureau of Economic Research, Inc.
    9. Lustig, Hanno & Syverson, Chad & Van Nieuwerburgh, Stijn, 2011. "Technological change and the growing inequality in managerial compensation," Journal of Financial Economics, Elsevier, vol. 99(3), pages 601-627, March.
    10. Adams, Renée & Keloharju, Matti & Knüpfer, Samuli, 2018. "Are CEOs born leaders? Lessons from traits of a million individuals," Journal of Financial Economics, Elsevier, vol. 130(2), pages 392-408.
    11. Simeon D. Alder, 2016. "In the Wrong Hands: Complementarities, Resource Allocation, and TFP," American Economic Journal: Macroeconomics, American Economic Association, vol. 8(1), pages 199-241, January.
    12. Oriana Bandiera & Andrea Prat & Stephen Hansen & Raffaella Sadun, 2020. "CEO Behavior and Firm Performance," Journal of Political Economy, University of Chicago Press, vol. 128(4), pages 1325-1369.
    13. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 49-100.
    14. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 75-102, December.
    15. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2013. "Does Management Matter? Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 128(1), pages 1-51.
    16. Xavier Gabaix & Augustin Landier & Julien Sauvagnat, 2014. "CEO Pay and Firm Size: An Update After the Crisis," Economic Journal, Royal Economic Society, vol. 124(574), pages 40-59, February.
    17. Michael L. Bognanno, 2010. "Executive Compensation: A Brief Review," DETU Working Papers 1002, Department of Economics, Temple University.
    18. Dietl Helmut M & Duschl Tobias & Lang Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, De Gruyter, vol. 13(2), pages 1-32, August.
    19. Shue, Kelly & Townsend, Richard R., 2017. "Growth through rigidity: An explanation for the rise in CEO pay," Journal of Financial Economics, Elsevier, vol. 123(1), pages 1-21.
    20. Steven N. Kaplan & Mark M. Klebanov & Morten Sorensen, 2008. "Which CEO Characteristics and Abilities Matter?," NBER Working Papers 14195, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Top managers; wage policies; linked worker-firm-manager data.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:nip:nipewp:2/2009. 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: . General contact details of provider: https://edirc.repec.org/data/nipampt.html .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: NIPE (email available below). General contact details of provider: https://edirc.repec.org/data/nipampt.html .

    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.