Does Globalization Create Superstars?

Hans Gersbach and Armin Schmutzler

No 6222, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: To examine the impact of globalization on managerial compensation, we consider a matching model where a number of firms compete both in the product market and in the managerial market. We show that globalization, that is, 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 can explain the increasing heterogeneity of CEO compensation 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: 2007-03
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mkt
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Citations: View citations in EconPapers (22)

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