Changes in Managerial Pay Structures 1986-1992 and Rising Returns to Skill

45 Pages Posted: 12 Jun 2000 Last revised: 18 Oct 2010

See all articles by K. C. O'Shaughnessy

K. C. O'Shaughnessy

Western Michigan University - Haworth College of Business

David I. Levine

University of California, Berkeley - Economic Analysis & Policy Group

Peter Cappelli

University of Pennsylvania Wharton School - Center for Human Resources; National Bureau of Economic Research (NBER); University of Pennsylvania - Management Department

Multiple version iconThere are 2 versions of this paper

Date Written: June 2000

Abstract

We examine the relationship between wages and skill requirements in a sample of over 50,000 managers in 39 companies between 1986 and 1992. The data include an unusually good measure of job requirements and skills that can proxy for human capital. We find that wage inequality increased both within and between firms from 1986 and 1992. Higher returns to our measure of skill accounts for most of the increasing inequality within firms. At the same time, our measure of skill does not explain much of the cross-sectional variance in average wages between employers, and changes in returns to skill do not explain any of the time series increase in between-firm variance over time. Finally, we find only weak evidence of any declines in the rigidity of internal wage structures of large employers.

Suggested Citation

O'Shaughnessy, K. C. and Levine, David Ian and Cappelli, Peter, Changes in Managerial Pay Structures 1986-1992 and Rising Returns to Skill (June 2000). NBER Working Paper No. w7730. Available at SSRN: https://ssrn.com/abstract=232112

K. C. O'Shaughnessy

Western Michigan University - Haworth College of Business ( email )

Kalamazoo, MI 49008
United States
616-771-9470 (Phone)

David Ian Levine

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States
510-642-1697 (Phone)
510-643-1420 (Fax)

Peter Cappelli (Contact Author)

University of Pennsylvania Wharton School - Center for Human Resources ( email )

3733 Spruce Street, Vance Hall
Philadelphia, PA 19104-6358
United States

HOME PAGE: http://www.wharton.upenn.edu/faculty/cappelli.html

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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