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Executive Compensation and Labor Expenses

Author

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  • Colonnello Stefano

    (Department of Economics, Ca’ Foscari University of Venice, Cannaregio 873, Fondamenta San Giobbe, Venice30121, Italy)

Abstract

Using data on US public firms, I uncover a strong and positive correlation between executive compensation and labor expenses. On average, a 1 % increase in the wage bill translates into a 0.3 % raise in total executive pay. This association is driven by wages rather than by employment growth, is stronger for the incentive than for the salary component of executive compensation, and is particularly pronounced in the financial sector.

Suggested Citation

  • Colonnello Stefano, 2020. "Executive Compensation and Labor Expenses," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-6, January.
    • Handle: RePEc:bpj:bejeap:v:20:y:2020:i:1:p:6:n:15
    DOI: 10.1515/bejeap-2019-0258
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    References listed on IDEAS

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    1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(1), pages 49-100.
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    More about this item

    Keywords

    executive compensation; labor expenses; employment;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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