Globalization and Executive Compensation

72 Pages Posted: 8 May 2017

See all articles by Wolfgang Keller

Wolfgang Keller

University of Colorado; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

William W. Olney

Williams College - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: May 2017


This paper finds that globalization is contributing to the rapid increase in executive compensation over the last few decades. Employing comprehensive data on top executives at major U.S. companies, we show that their compensation is increasing with exports and foreign direct investment, as well as firm size and technology. Exogenous export shocks unrelated to managerial decisions also increase executive compensation, and there is little evidence that this is due to increasing market returns to talent. We do find that export shocks primarily affect discretionary forms of compensation of more powerful executives at firms with poor corporate governance, as one would expect if globalization has enhanced rent-capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought.

Suggested Citation

Keller, Wolfgang and Olney, William W., Globalization and Executive Compensation (May 2017). NBER Working Paper No. w23384, Available at SSRN:

Wolfgang Keller (Contact Author)

University of Colorado ( email )

Department of Economics
PO Box 256
Boulder, CO 80309
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

United Kingdom

William W. Olney

Williams College - Department of Economics ( email )

Fernald House
Williamstown, MA 01267
United States

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