Shareholder wealth and wages: Evidence for white-collar workers

We present empirical evidence on the relationship between individual wages, conditional on worker characteristics, and equity returns using a unique s urvey from the Bureau of Labor Statistics. Equity returns affect the wages only of workers with three or more years of tenure. A 4 percent increase in a firm's market value raises pay by 0.3 percent within three years. Our es timates suggest that each $10 increase in shareholder wealth raises the pre sent value of a firm's wage bill by $1. The elasticity of white-collar wage s with respect to equity returns is one-third smaller than the CEO salary e lasticities in our sample.