Pay Cuts for the Boss: Executive Compensation in the 1940s

Carola Frydman and Raven Molloy

No 17303, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Executive pay fell during the 1940s, marking the last notable decrease in the past 70 years. We study this decline using a new panel dataset on the remuneration of top executives in 246 firms. We find that government regulation--including explicit salary restrictions and taxation--had, at best, a modest effect on executive pay. By contrast, a decline in the returns to firm size and an increase in the power of labor unions contributed greatly to the reduction in executive compensation relative to other workers' earnings from 1940 to 1946. The continued decrease in relative executive pay remains largely unexplained.

JEL-codes: G3 J31 M50 N32 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-his, nep-hrm and nep-lab
Note: CF DAE LS
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Published as Frydman, Carola & Molloy, Raven, 2012. "Pay Cuts for the Boss: Executive Compensation in the 1940s," The Journal of Economic History, Cambridge University Press, vol. 72(01), pages 225-251, March.

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