Discussion paper

DP12026 Globalization and Executive Compensation

Employing comprehensive data on top executives at major U.S. companies, we show that their compensation is increasing with exports, 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 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, globalization has been more important for the rapid growth of executive compensation and U.S. inequality than previously thought, with rent-capture playing a role.


Keller, W and W Olney (2017), ‘DP12026 Globalization and Executive Compensation‘, CEPR Discussion Paper No. 12026. CEPR Press, Paris & London. https://cepr.org/publications/dp12026