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

Economics

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

1 Scopus citations

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 (US)
Pages (from-to)	111-139
Number of pages	29
Journal	Economica
Volume	90
Issue number	357
DOIs	https://doi.org/10.1111/ecca.12447
State	Published - Jan 2023

All Science Journal Classification (ASJC) codes

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.",

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

note = "Funding Information: Parro thanks FONDECYT for its financial support (grant no. 11190751, ANID‐CHILE). Publisher Copyright: {\textcopyright} 2022 London School of Economics and Political Science.",

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The Distributional Effect of Trade on the CEO Market

Abstract

All Science Journal Classification (ASJC) codes

UN SDGs

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