没有合适的资源?快使用搜索试试~ 我知道了~
201705Does Transparency Lead to Pay Compression.pdf
1.该资源内容由用户上传,如若侵权请联系客服进行举报
2.虚拟产品一经售出概不退款(资源遇到问题,请及时私信上传者)
2.虚拟产品一经售出概不退款(资源遇到问题,请及时私信上传者)
版权申诉
0 下载量 111 浏览量
2022-06-26
19:09:29
上传
评论
收藏 1.25MB PDF 举报
温馨提示
试读
88页
201705Does Transparency Lead to Pay Compression.pdf
资源推荐
资源详情
资源评论
Does Transparency Lead to Pay Compression?
Alexandre Mas
*
Princeton University, IZA, and NBER
*
Industrial Relations Section, Firestone Library, Princeton University, Princeton NJ 08544, amas@princeton.edu. I
am grateful to Will Dobbie, Matthew Gentzkow, Ilyana Kuziemko, Emmanuel Saez, Jesse Shapiro, and Orie Shelef
for helpful comments, as well as seminar participants at University of Chicago, Harvard, UC Berkeley, NBER,
Princeton and Yale. Mingyu Chen, Kevin DeLuca, Kwabena Donkor, Helen Gao, Disa Hynsjo, Samsun Knight,
Rebecca Sachs, Dan Van Deusen, Jessica Wagner, and Yining Zhu provided excellent research assistance. This
project has been approved by Princeton’s Institutional Review Board.
Manuscript Click here to download Manuscript JPE_ResubmissionII.v3.docx
Copyright The University of Chicago 2017. Preprint (not copyedited or formatted). Please use DOI when citing or quoting.
This content downloaded from 132.239.001.231 on June 07, 2017 15:45:59 PM
All use subject to University of Chicago Press Terms and Conditions (http://www.journals.uchicago.edu/t-and-c).
2
Abstract
This paper asks whether pay disclosure in the public sector changes wage setting at the top of
the distribution. I examine a 2010 California mandate that required municipal salaries to be
posted online. Among top managers, disclosure led to approximately 7 percent average
compensation declines, and a 75 percent increase in their quit rate, relative to managers in
cities that had already disclosed salaries. The wage cuts were largely nominal. Wage cuts
were larger in cities with higher initial compensation, but not in cities where compensation
was initially out of line with (measured) fundamentals. The response is more consistent with
public aversion to high compensation than the effects of increased accountability.
Copyright The University of Chicago 2017. Preprint (not copyedited or formatted). Please use DOI when citing or quoting.
This content downloaded from 132.239.001.231 on June 07, 2017 15:45:59 PM
All use subject to University of Chicago Press Terms and Conditions (http://www.journals.uchicago.edu/t-and-c).
3
Pay transparency policies are growing in importance. Recent examples include states and
cities that have increasingly disclosed worker salaries as part of sunshine initiatives, a U.S.
presidential memorandum that recommends requiring federal contractors to submit summary
data on employee compensation by race and sex, and a newly imposed rule that requires publicly
traded companies to compare CEO pay with the pay of the median worker.
1
In an extreme
example, Norway publishes all of its residents’ tax returns online (MacDougall 2009).
While the literature has made progress in understanding how preferences about inequality
and redistribution are shaped by available information (e.g. Bartels 2005; Card et al. 2012;
Cruces, Perez-Truglia, and Tetaz 2013; Kuziemko et al. 2013; Karadja, Mollerstrom, and Seim
2014), little is known about whether transparency affects pay. Two reasons why salary
transparency might change the compensation structure in organizations, particularly at the top of
the distribution, are (1) greater accountability and (2) public aversion to salaries perceived as
excessive.
Advocates for transparency polices in the public sector have stressed that increased
disclosure should lead to increased accountability.
2
Better information might allow the public to
hold elected officials more accountable for gaps between pay and productivity.
3
Increased
accountability could result in lower manager compensation if capture and managerial power are
restrained.
4
Consistent with this hypothesis, using survey data from across 175 countries,
1
See https://ballotpedia.org/State_government_salary for states with employee salary databases,
www.whitehouse.gov/the-press-office/2014/04/08/ presidential-memorandum-advancing-pay-equality-through-
compensation-data for the presidential memorandum, and https://www.sec.gov/news/pressrelease/2015-160.html for
the SEC rule of CEO pay relative to the median worker.
2
See, for example, The Economist, “Sunshine or colonoscopy?” November 19, 2011.
http://www.economist.com/node/21538774
3
Greenstone, Oyer, and Vissing-Jorgenson (2006) find evidence that mandated disclosure requirements in the 1964
Securities Act led managers to focus more on maximizing shareholder value.
4
See Di Tella and Fisman (2004), Diamond (2013) and Brueckner and Neumark (2014) for evidence of rent
extraction in the public sector.
Copyright The University of Chicago 2017. Preprint (not copyedited or formatted). Please use DOI when citing or quoting.
This content downloaded from 132.239.001.231 on June 07, 2017 15:45:59 PM
All use subject to University of Chicago Press Terms and Conditions (http://www.journals.uchicago.edu/t-and-c).
4
Djankov et al. (2010) find that public disclosure of politicians’ income is associated with lower
perceived corruption and better government.
Transparency may also lead to pay compression if there is public sentiment against high
levels of compensation, even if compensation is in line with fundamentals. Such a response
would be consistent with inequality aversion on the part of the public (Fehr and Schmidt 1999).
5
There has been speculation in the executive compensation literature that this type of “populist”
response to seemingly high levels of compensation has contributed to lower executive pay in
publicly traded companies where top salaries are disclosed (Jensen and Murphy 1990), though
there is little quantitative evidence of this phenomenon.
Understanding the effects of transparency on wage setting, as well as the underlying
mechanisms, is important for guiding policy. Estimating this effect is challenging, as it requires
finding variation in transparency at an organizational level, as well as data on wages. This paper
seeks to overcome these difficulties by examining how a 2010 California mandate that required
cities to disclose municipal salaries affected the compensation of the Chief Administrative
Officer (“city manager”) position—typically the highest paid city employee. The research design
exploits the fact that prior to the mandate a subset of cities (“previous disclosure” cities) had
already disclosed the salaries of their top managers.
6
Using the Internet Wayback Machine and
archives of more than three hundred local newspapers, I identify cities where the salaries of city
managers were already disclosed to the press or on their websites at the time of the mandate.
Prior to the mandate, 63 percent of cities already disclosed the salary of the city manager. I
5
A related mechanism is morale considerations on the part of workers since transparency can lower job satisfaction
(Card et al. 2012) and being paid below expectations can lead to declines in productivity (Greenberg 1990; Krueger
and Mas 2004; Mas 2006; Mas 2008; Cohn et al. 2014). Employers might internalize these fairness concerns when
setting pay (Frank 1984, Akerlof and Yellen 1990, and Bartling and von Siemens 2010). Transparency might also
reduce gender and race wage gaps by making it easier to compare wages of workers in similar jobs; this was, in fact,
the stated motivation behind the 2014 presidential memorandum referenced above.
6
This strategy is similar to the one used by Bo, Slemrod, and Thoresen (2014) who study the effects of disclosure on
tax avoidance in Norway.
Copyright The University of Chicago 2017. Preprint (not copyedited or formatted). Please use DOI when citing or quoting.
This content downloaded from 132.239.001.231 on June 07, 2017 15:45:59 PM
All use subject to University of Chicago Press Terms and Conditions (http://www.journals.uchicago.edu/t-and-c).
5
compare these cities to other cities where the mandate represented the first recorded disclosure of
city manager salary (“new disclosure” cities). I also make comparisons to wages in Arizona
cities, where there were no changes in disclosure policy.
One difficulty when studying the effects of disclosure policies is that pre-disclosure
information is not typically available. In order to examine pre-mandate trends, I made a public
records request to all 482 cities in California for 1999-2012 payroll records and contracts of city
managers, and to the California Public Employees' Retirement System (CalPERS) for 2001-2012
earnings records of employees who contributed to CalPERS pensions.
The evidence suggests that compensation is sensitive to increased transparency. Comparing
the evolution of wages in cities that previously did and did not disclose salaries, I find that salary
disclosure reduced compensation of city managers by an average of approximately 7 percent.
These cuts occurred both in cities where managers remained in their position, and in cities where
managers changed. Interestingly, given the evidence on firms’ reluctance to cut nominal wages
(Bewley 2012), these cuts were largely nominal. Wage cuts were substantially larger in cities
where compensation was initially higher, particularly cities where the city managers were paid
more than $200k annually prior to disclosure (the mean salary was $193k in 2009). There was no
relative decline in the 50
th
, 75
th
, and 90
th
percentiles of the city wage distributions, on average,
implying that reductions at the top of the wage distribution reflect pay compression.
Importantly, this wage effect does not appear to be the result of citywide furloughs or
budget cuts following the 2007 recession. I find no evidence of differential changes between new
and previous disclosure cities in average earnings of municipal employees excluding the city
manager, number of municipal employees, or the average income levels of residents.
Additionally, the wage reductions came after furloughs peaked in California.
Copyright The University of Chicago 2017. Preprint (not copyedited or formatted). Please use DOI when citing or quoting.
This content downloaded from 132.239.001.231 on June 07, 2017 15:45:59 PM
All use subject to University of Chicago Press Terms and Conditions (http://www.journals.uchicago.edu/t-and-c).
剩余87页未读,继续阅读
资源评论
samLi0620
- 粉丝: 1001
- 资源: 1万+
上传资源 快速赚钱
- 我的内容管理 展开
- 我的资源 快来上传第一个资源
- 我的收益 登录查看自己的收益
- 我的积分 登录查看自己的积分
- 我的C币 登录后查看C币余额
- 我的收藏
- 我的下载
- 下载帮助
安全验证
文档复制为VIP权益,开通VIP直接复制
信息提交成功