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Extreme Wage Inequality: Pay at the Very Top

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  • Brian Bell
  • John Van Reenen

Abstract

We provide new evidence on the growth in pay at the very top of the wage distribution in the UK. Sectoral decompositions show that workers in the financial sector have accounted for the majority of the gains at the top over the last decade. New results are also presented on the pay of CEOs in the UK. We show how improved measurement of pay points to a stronger pay-performance link than previously estimated. This link is stronger, and more symmetric, for those firms in which institutional investors play a larger role.

Suggested Citation

  • Brian Bell & John Van Reenen, 2013. "Extreme Wage Inequality: Pay at the Very Top," CEP Occasional Papers 34, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepops:34
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    File URL: https://cep.lse.ac.uk/pubs/download/occasional/op034.pdf
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    References listed on IDEAS

    as
    1. Steven N. Kaplan & Joshua Rauh, 2010. "Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?," NBER Chapters, in: Corporate Governance, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    wage inequality; firm performance; CEO compensation; performance pay; management;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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