TY  - JOUR
AU  - Lustig,Hanno
AU  - Syverson,Chad
AU  - Nieuwerburgh,Stijn Van
TI  - Technological Change and the Growing Inequality in Managerial Compensation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14661
PY  - 2009
Y2  - January 2009
UR  - http://www.nber.org/papers/w14661
L1  - http://www.nber.org/papers/w14661.pdf
N1  - Author contact info:
Hanno Lustig
UCLA Anderson School of Management
110 Westwood Plaza, Suite C413
Los Angeles, CA 90095-1481
Tel: 310/825-1011
Fax: 310/825-9528
E-Mail: hlustig@anderson.ucla.edu

Chad Syverson
University of Chicago
Booth School of Business
5807 S. Woodlawn Ave.
Chicago, IL  60637
Tel: 773/702-7815
Fax: 773/702-8490
E-Mail: chad.syverson@chicagobooth.edu

Stijn Van Nieuwerburgh
Stern School of Business
New York University
44 W 4th Street, Suite 9-120
New York, NY 10012
Tel: 646/284-4141
Fax: 646/284-4141
E-Mail: svnieuwe@stern.nyu.edu
AB  - Three of the most fundamental changes in US corporations since the early 1970s have been (1) the increased importance of organizational capital in production, (2) the increase in managerial income inequality and pay-performance sensitivity, and (3) the secular decrease in labor market reallocation. Our paper develops a simple explanation for these changes: a shift in the composition of productivity growth away from vintage-specific to general growth. This shift has stimulated the accumulation of organizational capital in existing firms and reduced the need for reallocating workers to new firms. We characterize the optimal managerial compensation contract when firms accumulate organizational capital but risk-averse managers cannot commit to staying with the firm. A calibrated version of the model reproduces the increase in managerial compensation inequality and the increased sensitivity of pay to performance in the data over the last three decades.
ER  -