Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/191675
Authors: 
Schymik, Jan
Year of Publication: 
2017
Series/Report no.: 
Munich Discussion Paper 2017
Abstract: 
Many industrialized economies have seen a rapid rise in top income inequality and in the globalization of production since the 1980s. In this paper I propose an open economy model of executive pay to study how offshoring affects the pay level and incentives of top earners. The model introduces a simple principal-agent problem into a heterogeneous firm talent assignment model and endogenizes pay levels and the sensitivity of pay to performance in general equilibrium. Using unique data of manager-firm matches including executives from stock market listed firms across the U.S. and Europe, I quantify the model predictions empirically. Overall, I find that between 2000 and 2014 offshoring has increased executive pay levels, raised earnings inequality across executives and increased the sensitivity of pay to firm performance.
Subjects: 
Offshoring
Earnings Structure
Inequality
Incentives
Executive Compensation
JEL: 
D2
F1
F2
J3
L2
Persistent Identifier of the first edition: 
Document Type: 
Working Paper
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