Globalization Gave American CEOs Fatter Paychecks

The idea that advanced-economy globalization has fostered inequality is a common theme these days, but we may be spending too much time focusing on the lower end of the income scale, new research suggests.

While low- and middle-skill jobs shifted overseas, hurting pay at the bottom, interconnected trade networks have also pushed up income at the very top of the scale, a new paper by University of Colorado Boulder economist Wolfgang Keller and Williams College's William Olney finds. It's the first item in our research wrap this week. We also take a look at employers' take on coding bootcamps, monetary policy rules, and what happens when for-profit colleges lose federal student aid. Check this column each week for the latest in pertinent economic research from around the world.

The top 1 percent can attribute their fatter paychecks partly to globalization, new research finds. As exports climb, so does executive compensation. That could be because super-talented CEOs are needed to deal with a globalized world, but the authors find that the increase often comes from bonus payments rather than regular salary. The effect is especially strong in companies with insiders on the board or low marginal tax rates on top pay. "This indicates that rent capture plays an important role in the relationship between globalization and top incomes," the authors write, indicating that internal deal-making rather than skills boosts pay.