Shareholder Wealth and Wages: Evidence for White-Collar Workers

Stephen Bronars () and Melissa Famulari

Journal of Political Economy, 2001, vol. 109, issue 2, 328-354

Abstract: We present empirical evidence on the relationship between individual wages, conditional on worker characteristics, and equity returns using a unique survey from the Bureau of Labor Statistics. Equity returns affect the wages only of workers with three or more years of tenure. A 4 percent increase in a firm's market value raises pay by 0.3 percent within three years. Our estimates suggest that each $10 increase in shareholder wealth raises the present value of a firm's wage bill by $1. The elasticity of white-collar wages with respect to equity returns is one-third smaller than the CEO salary elasticities in our sample.

Date: 2001
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