Sectoral Differences in Managers’ Compensation: Insights from a Matching Model

51 Pages Posted: 24 Apr 2015

Date Written: January 23, 2015

Abstract

We propose a structural model of two-sided matching and a semi-parametric procedure for its estimation that allow to analyze determinants of managers’ compensation such as firm’s and manager’s quality, production technology, bargaining power and inter-temporal preferences. We use the estimated model to study the stylized fact that managers in the financial sector receive higher compensation than their peers in other sectors. Our results suggest that a predominant portion of this wage gap is explained by differences in production technology, while differences in bargaining power, preferences and quality have a minor impact and are seldom statistically significant.

Keywords: managers’ compensation, job matching

JEL Classification: C73, D31, J63, J64

Suggested Citation

Ciapanna, Emanuela and Taboga, Marco and Viviano, Eliana, Sectoral Differences in Managers’ Compensation: Insights from a Matching Model (January 23, 2015). Bank of Italy Temi di Discussione (Working Paper) No. 1000, Available at SSRN: https://ssrn.com/abstract=2598063 or http://dx.doi.org/10.2139/ssrn.2598063

Emanuela Ciapanna (Contact Author)

Bank of Italy ( email )

Research Department
Via Nazionale 91
Roma, 00184
Italy
00390647922188 (Phone)

Marco Taboga

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Eliana Viviano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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