Management compensation and firm-level income inequality

Arbeitspapier

In recent decades, most developed countries have experienced a simultaneous increase in income inequality and management compensation. In this paper, we study the relation between management compensation and firm-level income dynamics in a general equilibrium model. Empirical estimation, of the model's key parameters show that the rising management premium is indeed the main driving force behind the observed increase in income inequality. This is the case even when other potential sources such as technological progress and skill-biased technological change are taken into account. We also show that a rising management premium produces income distribution dynamics at the firm level which are similar to those observed at the market level, i.e. rising income inequality overall as well as within and between education groups.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3676

Classification and Topics

• Classification: Wirtschaft
• Subject: Income inequality ; two-sector search model ; skill-biased technological change ; personnel data ; Lohnstruktur ; Unternehmen ; Führungskräfte ; Gehalt ; Einkommensverteilung ; Qualifikation ; Technischer Fortschritt ; Mehr-Sektoren-Modell ; Allgemeines Gleichgewicht ; Theorie ; Dänemark

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Frederiksen, Anders ; Poulsen, Odile
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/35203
• URN: urn:nbn:de:101:1-2008092349
• Last update: 10.03.2025, 11:42 AM CET