The Distributional Effect of Trade on the CEO Market

Juan A. Correa, Francisco Parro, Rafael Sánchez

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


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 languageEnglish
Pages (from-to)111-139
Number of pages29
Issue number357
StatePublished - Jan 2023
Externally publishedYes


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