NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Impact of Employee Stock Options on the Evolution of Compensation in the 1990s

Hamid Mehran, Joseph Tracy

NBER Working Paper No. 8353
Issued in July 2001
NBER Program(s):   ME

Between 1995 and 1998, actual growth in nominal compensation per hour (CPH) accelerated from approximately 2 percent to 5 percent. Yet as labor markets continued to tighten in 1999, the growth in CPH paradoxically slowed. In this article, we attempt to solve this aggregate wage puzzle by exploring whether changes in pay structure - specifically, the increased use of employee stock options - can account for the behavior of CPH in the late 1990s. CPH reflects employee stock options on the date they are realized rather than on the date they are granted. When we recalculate CPH growth to reflect the value of current stock options when they are granted - rather than their value when they are realized - we find that our adjusted CPH measure accelerated in each year from 1995 to 1999.

download in pdf format
   (247 K)

email paper

This paper is available as PDF (247 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8353

Published: Mehran, Hamid and Joseph Tracy. "The Effect Of Employee Stock Options On The Evolution Of Compensation In The 1990s," FRB New York- Economic Policy Review, 2001, v7(3,Dec), 17-34.

Users who downloaded this paper also downloaded these:
Hall and Murphy w9784 The Trouble with Stock Options
Blasi, Freeman, Mackin, and Kruse w14230 Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance
Bergman and Jenter w11409 Employee Sentiment and Stock Option Compensation
Hall and Murphy w7548 Optimal Exercise Prices for Executive Stock Options
Hall and Murphy w8052 Stock Options for Undiversified Executives
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us