Globalization and the Provision of Incentives inside the Firm: The Effect of Foreign Competition

Vicente Cuñat and Maria Guadalupe ()
Authors registered in the RePEc Author Service: Vicente Cuñat

Journal of Labor Economics, 2009, vol. 27, issue 2, 179-212

Abstract: This article studies the effect of changes in foreign competition on the structure of compensation and incentives of U.S. executives. We find that import penetration (instrumented with exchange rates and tariffs) leads to more incentive provision in a variety of ways. First, it increases the sensitivity of pay to performance. Second, it increases within-firm pay differentials between executive levels, with CEOs typically experiencing the largest wage increases. Finally, higher foreign competition is also associated with a higher demand for talent. These results suggest that increased foreign competition can explain some of the recent trends in compensation structures. (c) 2009 by The University of Chicago. All rights reserved.

Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (107)

Downloads: (external link)
http://dx.doi.org/10.1086/599817 link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Globalization and the provision of incentives inside the firm: The effect of foreign competition (2009)
Working Paper: Globalization and the Provision of Incentives Inside the Firm: The Effect of Foreign Competition (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlabec:v:27:y:2009:i:2:p:179-212

Access Statistics for this article

More articles in Journal of Labor Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().