PhD Lunch Seminars Rotterdam

Yuhao Zhu (Erasmus University Rotterdam0
Thursday, November 17, 2016

Does employee envy matter for setting wages? Using German establishment-level wage data, we show that employee wages are increasing in CEO compensation. When CEO compensation increases 1%, the median employee’s wage increases by about 0.04%. Higher CEO compensation also increases the probability for the existence of employee stock ownership plans. Our evidence suggests that inequality aversion of employees is an important driver of wages and increases the costs of executive compensation significantly.