Does globalization create superstars? A simple theory of managerial wages

Hans Gersbach and Armin Schmutzler

European Economic Review, 2014, vol. 71, issue C, 34-51

Abstract: To examine the impact of globalization on managerial remuneration, we consider a matching model where firms compete both in the product market and in the managerial market. We show that globalization, i.e., the simultaneous integration of product markets and managerial pools, leads to an increase in the heterogeneity of managerial salaries. Typically, while the most able managers obtain a wage increase, less able managers are faced with a reduction in wages. Hence our model is consistent with the increasing heterogeneity of CEO remuneration that has been observed in the last few decades.

Keywords: Globalization; Manager remuneration; Superstars (search for similar items in EconPapers)
JEL-codes: D43 F15 J31 L13 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (20)

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Working Paper: Does globalization create superstars? A simple theory of managerial wages (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:71:y:2014:i:c:p:34-51

DOI: 10.1016/j.euroecorev.2014.03.006

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