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

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Resumen

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.

Idioma original	Inglés
Páginas (desde-hasta)	111-139
Número de páginas	29
Publicación	Economica
Volumen	90
N.º	357
DOI	https://doi.org/10.1111/ecca.12447
Estado	Publicada - ene. 2023
Publicado de forma externa	Sí

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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.",

author = "Correa, {Juan A.} and Francisco Parro and Rafael S{\'a}nchez",

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year = "2023",

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doi = "10.1111/ecca.12447",

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volume = "90",

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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

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