The Impact of Employee Stock Options on the Evolution of Compensation in the 1990s

Hamid Mehran and Joseph Tracy

No 8353, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Between 1995 and 1998, actual growth in nominal compensation per hour (CPH) accelerated from approximately 2 percent to 5 percent. Yet as labor markets continued to tighten in 1999, the growth in CPH paradoxically slowed. In this article, we attempt to solve this aggregate wage puzzle by exploring whether changes in pay structure - specifically, the increased use of employee stock options - can account for the behavior of CPH in the late 1990s. CPH reflects employee stock options on the date they are realized rather than on the date they are granted. When we recalculate CPH growth to reflect the value of current stock options when they are granted - rather than their value when they are realized - we find that our adjusted CPH measure accelerated in each year from 1995 to 1999.

JEL-codes: J33 J38 (search for similar items in EconPapers)
Date: 2001-07
New Economics Papers: this item is included in nep-lab
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (36)

Published as Mehran, Hamid and Joseph Tracy. "The Effect Of Employee Stock Options On The Evolution Of Compensation In The 1990s," FRB New York- Economic Policy Review, 2001, v7(3,Dec), 17-34.

Downloads: (external link)
http://www.nber.org/papers/w8353.pdf (application/pdf)

Related works:
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:nbr:nberwo:8353

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8353

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().