Pensions and Wages: A Test for Equalizing Differences

1980 ◽  
Vol 62 (4) ◽  
pp. 529 ◽  
Author(s):  
Bradley R. Schiller ◽  
Randall D. Weiss
Keyword(s):  
Equalizing Differences

Chief executive officers and the pay–pension tradeoff

2009 ◽  
Vol 9 (2) ◽  
pp. 303-319 ◽  
Author(s):  
JOSEPH GERAKOS
Keyword(s):  
Chief Executive Officers ◽  
Boards Of Directors ◽  
Bargaining Power ◽  
Chief Executive ◽  
Executive Officers ◽  
Equalizing Differences ◽  
Pension Benefits ◽  
Cent Decrease

AbstractThe theory of equalizing differences predicts that workers trade pay for benefits, but empirical confirmation of such tradeoffs is rare. This study investigates the extent to which chief executive officers (CEOs) trade pay for pension benefits. For a sample of S&P 500 CEOs, I find that an additional dollar of pension benefits is associated with a 48 cent decrease in pay. Although the tradeoff estimate is significantly different from zero, it is also significantly less than the anticipated rate of dollar-for-dollar, especially for CEOs with relatively more bargaining power over their boards of directors. This implies that the implicit price of pension benefits decreases with the CEO's bargaining power, so pooling datasets on CEOs with varying degrees of power blurs the size of the pay–pension tradeoff.

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