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Globalization and Executive Compensation

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Abstract

Employing comprehensive data on top executives at major U.S. companies, we show that their compensation is increasing with exports, as well as firm size and technology. Exogenous export shocks unrelated to managerial decisions also increase executive compensation, and there is little evidence that this is due to increasing returns to talent. We do find that export shocks primarily affect discretionary forms of compensation of more powerful executives at firms with poor corporate governance, as one would expect if globalization has enhanced rent-capture opportunities. Overall, globalization has been more important for the rapid growth of executive compensation and U.S. inequality than previously thought, with rent-capture playing a role.

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  • Wolfgang Keller & William W. Olney, 2017. "Globalization and Executive Compensation," Department of Economics Working Papers 2017-04, Department of Economics, Williams College, revised Feb 2018.
  • Handle: RePEc:wil:wileco:2017-04
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    Cited by:

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    2. Olney, William W., 2020. "Cabotage sabotage? The curious case of the Jones Act," Journal of International Economics, Elsevier, vol. 127(C).
    3. Tommaso Ciarli & André Lorentz & Marco Valente & Maria Savona, 2019. "Structural changes and growth regimes," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 119-176, March.
    4. Sarath Balachandran & Exequiel Hernandez, 2019. "Do Institutional Reforms Perpetuate or Mitigate the Matthew Effect? Intellectual Property Rights and Access to International Alliances," Strategy Science, INFORMS, vol. 4(2), pages 151-174, June.
    5. Chakraborty, Pavel & Raveh, Ohad, 2018. "Input-trade liberalization and the demand for managers: Evidence from India," Journal of International Economics, Elsevier, vol. 111(C), pages 159-176.
    6. Ma, Lin & Ruzic, Dimitrije, 2020. "Globalization and top income shares," Journal of International Economics, Elsevier, vol. 125(C).
    7. Kohl, Miriam, 2020. "Redistribution, selection, and trade," Journal of International Economics, Elsevier, vol. 122(C).
    8. Joern Kleinert, 2018. "Globalization Effects on the Distribution of Income," Graz Economics Papers 2018-07, University of Graz, Department of Economics.
    9. Nicola D. Coniglio & Rezart Hoxhaj, 2018. "Global interactions and the ‘twin’ gender gaps in employment and wages: evidence from Vietnam," RSCAS Working Papers 2018/18, European University Institute.

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    More about this item

    Keywords

    Inequality; Executive Compensation; Globalization; Exports;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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