Labour markets

Controlling UK executive pay

Ian Gregory-Smith, Steve Thompson, Peter Wright, 24 March 2014

In 2003, the UK adopted a ‘say on pay’ policy, whereby quoted companies’ executive compensation offers have to be put to a shareholder vote. This column presents evidence that this policy has had a relatively modest impact on executive pay. A 10% increase in compensation is associated with an increase in shareholder dissent against the proposal of just 0.2%. However, remuneration committees representing the more highly rewarded CEOs are quite sensitive to dissent, provided it exceeds a critical threshold of about 10%. Shareholders do not appear more anxious about pay since the crisis.

Skilled immigration and US jobs: Firm-level evidence

Sari Pekkala Kerr, William Kerr, William Lincoln, 16 March 2014

Though skilled immigration is of great importance to the US, no consensus has been reached in the public discourse about its effects on citizen workers and economic growth. This column looks at a different perspective of this relationship. It explores the effect of skilled immigrants on the employment structures of US firms using employer-employee data. The results show the total skilled employment by the firm increases with increases in skilled immigrant employment. However, the employment expansion is greater for younger natives than for their older counterparts.

What drives the EU labour-market mismatch?

Alfonso Arpaia, Alessandro Turrini, 7 March 2014

The surge in unemployment in many EU countries has prompted concerns that the underlying structural unemployment has shifted upwards, so that high rates of joblessness could persist also once the recovery is on a solid footing. In this column we draw on recent analysis (European Commission, 2013) and focus on two issues: to what extent the reduced efficiency of labour market matching is contributing to growing structural unemployment? Which are the main drivers of matching efficiency across the EU?

Firm age, investment opportunities, and job creation

Manuel Adelino, Song Ma, David Robinson, 12 February 2014

There is a strong link between entrepreneurship and growth – young firms were responsible for almost all net job creation in the US economy over the last 30 years. This column presents new research into the responsiveness of firms of different ages to investment opportunities. Firms aged 0–23 months create about twice the total number of new jobs in response to local income shocks than firms that are more than six years old.

Job polarisation and the decline of middle-class workers’ wages

Michael Boehm, 8 February 2014

Employment in traditional middle-class jobs has fallen sharply over the last few decades. At the same time, middle-class wages have been stagnant. This column reviews recent research on job polarisation and presents a new study that explicitly links job polarisation with the changes in workers' wages. Job polarisation has a substantial negative effect on middle-skill workers.

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