Globalization and CEO Pay
Much attention has been given to increasing income shares of top income earners in many advanced economies. Atkinson and Søgaard (2016) report top 1 percent income shares over time for a number of countries including Denmark and show that all countries have exhibited increasing top income shares since the 1980s. A large part of these top income earners have been found to consist of the CEOs of the top firms, or ‘supermanagers’. Rising CEO pay may reflect the growing importance of general managerial skills (Murphy and Zabojnik, 2004) and the market for talent. This view is supported by a series of recent papers by Nicholas Bloom and various coauthors (e.g. Bender et al., 2016, Bloom and Van Reenen, 2007, and Bloom et al. 2013) showing that variation across firms in the use of sophisticated management techniques explains a considerable portion of variation in productivity, sales and profitability. Other authors have emphasized the possibility that CEO pay reflects growing influence over corporate boards, the ability to set their own compensation, and capture rents within the firm.1 In short, it remains an open question whether rising CEO pay reflects good management, or good luck.