Distributive Justice and CEO Compensation

This paper develops a framework for studying individuals’ ideas about what constitutes just compensation for chief executive officers (CEOs) and reports estimates of just CEO pay and the principles guiding ideas of justice. The sample consists of students pursuing a Master of Business Administration (MBA) degree in Sweden and the United States. The framework, based on justice theory and making use of Rossi’s factorial survey method, enables assessment of ideas of fairness in CEO compensation, including (1) the just CEO compensation, in the eyes of each observer; (2) the principles of microjustice – observers’ ideas about “who should get what” based on characteristics of CEOs and their firms; and (3) principles of macrojustice – ideas about the just level and dispersion in compensation across all CEOs. Our estimates yield the following main results: First, there is broad agreement on the median just CEO compensation but substantial inter-individual variation in the principles of microjustice and the other principles of macrojustice. Second, there is remarkable similarity in the distributions of the principles of microjustice and macrojustice across the MBA groups. Other important results include a pervasive gender attentiveness among MBA students and tolerance for large variability in CEO pay.justice theory, fairness, CEO compensation, factorial survey method, MBA students, gender, inequality, Gini coefficient, Atikinson measure, Theil's inequality measures

Are Female Workers Less Productive Than Male Workers?

This paper addresses whether there are productivity differences between men and women among blue-collar workers. We compare the wages under piece- and time-rate contracts of men and women working in the same occupation in the same establishment in three countries: the U.S., Norway, and Sweden. The findings are summarized in four points. First, the gender wage gap is smaller under piece- than under time-rate work. According to the interpretation put forth here, two thirds of the gap at the occupation–establishment level is due to productivity differences, while one third is not “accounted for”, but could be due to discrimination or experience or other factors. Productivity differences between sexes in typically male-dominated blue-collar industries are however very small, of 1– 3%: Sweden 1%, U.S. 2% and Norway 3%. Second, in age groups where women on average have extensive family obligations, the wage gap is larger than in other age groups. Third, under time-rate work, the wage gap is more or less independent of supposed occupation-based productivity differences between men and women, while under piece-rate work, the wage gap mirrors quite closely assumed productivity differences, with women receiving a wage premium in female-advantageous settings and a penalty in male-advantageous settings. Fourth, in contrast to Sweden, in Norway and the U.S. women sort more often into piece-rate work than men.

Pay,Risk,and Productivity.The Case of Finland,1980 -1996

This paper reports on four topics. To what extent are piece-rate systems used among manufacturing workers in Finland? What is the effect on the average pay level of using piece- versus time-rate systems? How much wage risk is associated with a piece-rate system? How much of the pay differential between pieceand time-rate workers is compensation for extra effort and how much is compensation for bearing additional risk? Have these relations changed over time? We have access to unique individual-level data on payment systems from several thousand establishments and more than a quarter of a million individuals in the Finnish private sector