The Distributional Effect of Trade on the CEO Market

Juan A. Correa; Francisco Parro; Rafael Sánchez

doi:10.1111/ecca.12447

The Distributional Effect of Trade on the CEO Market

Juan A. Correa, Francisco Parro, Rafael Sánchez

Research output: Contribution to journal › Article › peer-review

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Abstract

We study the relationship between trade openness and CEO pay dispersion across firms. Using US firm-level data, we show that trade has an unequal effect on CEO equilibrium pay at firms of different sizes (sales). An increase of 10% in the industry openness degree raises CEO compensation by about 14% in firms at the 99th percentile of the size distribution. However, CEO compensation falls by 5% in firms at the 1st percentile. Analogous results are derived for other points of the distribution. Our results show that trade openness impacts inequality within the very top of the income distribution, where skill differentials are less evident.

Original language	English
Journal	Economica
DOIs	https://doi.org/10.1111/ecca.12447
Publication status	Accepted/In press - 2022

ASJC Scopus subject areas

Economics and Econometrics

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This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1111/ecca.12447

Cite this

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title = "The Distributional Effect of Trade on the CEO Market",

abstract = "We study the relationship between trade openness and CEO pay dispersion across firms. Using US firm-level data, we show that trade has an unequal effect on CEO equilibrium pay at firms of different sizes (sales). An increase of 10% in the industry openness degree raises CEO compensation by about 14% in firms at the 99th percentile of the size distribution. However, CEO compensation falls by 5% in firms at the 1st percentile. Analogous results are derived for other points of the distribution. Our results show that trade openness impacts inequality within the very top of the income distribution, where skill differentials are less evident.",

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AB - We study the relationship between trade openness and CEO pay dispersion across firms. Using US firm-level data, we show that trade has an unequal effect on CEO equilibrium pay at firms of different sizes (sales). An increase of 10% in the industry openness degree raises CEO compensation by about 14% in firms at the 99th percentile of the size distribution. However, CEO compensation falls by 5% in firms at the 1st percentile. Analogous results are derived for other points of the distribution. Our results show that trade openness impacts inequality within the very top of the income distribution, where skill differentials are less evident.

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The Distributional Effect of Trade on the CEO Market

Abstract

ASJC Scopus subject areas

UN SDGs

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