Globalization and the Provision of Incentives inside the Firm: The Effect of Foreign Competition

• 成果类型: Article
• 署名作者: Cunat, Vicente; Guadalupe, Maria
• 署名单位: University of London; London Business School; Columbia University
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/599817
• 发表日期: 2009
• 页码: 179-212
• 关键词: product-market competition; executive-compensation; managerial incentives; import competition; wage inequality; performance pay; labor-market; ceo pay; hysteresis; tournament

摘要

This article studies the effect of changes in foreign competition on the structure of compensation and incentives of U. S. executives. We find that import penetration (instrumented with exchange rates and tariffs) leads to more incentive provision in a variety of ways. First, it increases the sensitivity of pay to performance. Second, it increases within-firm pay differentials between executive levels, with CEOs typically experiencing the largest wage increases. Finally, higher foreign competition is also associated with a higher demand for talent. These results suggest that increased foreign competition can explain some of the recent trends in compensation structures.