TY  - JOUR
AU  - Mehran,Hamid
AU  - Tracy,Joseph
TI  - The Impact of Employee Stock Options on the Evolution of Compensation in the 1990s
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8353
PY  - 2001
Y2  - July 2001
UR  - http://www.nber.org/papers/w8353
L1  - http://www.nber.org/papers/w8353.pdf
N1  - Author contact info:
Hamid Mehran
Federal Reserve Bank of New York
33 Liberty Street
New York, New York 10045
E-Mail: Hamid.Mehran@ny.frb.org

Joseph Tracy
Executive Vice President
Federal Reserve Bank of New York
33 Liberty Street
New York, NY 10045
Tel: 212/720-6344
E-Mail: joseph.tracy@ny.frb.org
AB  - 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.
ER  -