Ups and Downs in Finance, Ups without Downs in Inequality

The upswing in finance over the past several decades has led to rising inequality, but do downswings in finance lead to a symmetric decline in inequality? In this paper, we analyze the asymmetry of the effect of ups and downs in financial markets, as well as the effect of increased capital requirements and the bonus cap on national earnings in- equality. We use administrative employer–employee linked data on earnings from 1990 to 2017 for twelve countries. Additionally, we use data on earnings from bank reports, from 2009 to 2017 in thirteen European countries. We find a strong asymmetry in the effects of financial ups and downs on earnings inequality, a mitigating effect of rising capital requirements on the contribution of finance to inequality, and a restructuring ef- fect of the bonus cap for the earnings of financiers, while neither policy affects absolute levels of earnings inequality.La hausse de la finance au cours des dernières décennies a entraîné une hausse des inégalités, mais les ralentissements de la finance entraînent-ils une baisse symétrique des inégalités? Dans cet article, nous examinons l'asymétrie de l'effet des hausses et des ralentissements des marchés financiers, ainsi que l'effet de l'augmentation des exi- gences en matière de capital et du plafonnement des primes sur l'inégalité des salaires nationaux. Nous utilisons des données administratives couplées employeur-employé sur les salaires de 1990 à 2017 pour douze pays. De plus, nous employons des données sur les salaires provenant des rapports bancaires, de 2009 à 2017, dans 13 pays euro- péens. Nous constatons une forte asymétrie dans les effets des hausses et des ralentis- sements financières sur l'inégalité des salaires, un effet de mitigation de l'augmentation des exigences de capitalisation sur la contribution de la finance à l'inégalité, et un effet de restructuration du plafonnement des primes pour les salaires des financiers, alors qu'aucune des deux mesures n'affecte les niveaux absolus d'inégalité des salaires.iv MaxPo Discussion Paper 21/2 1 Introduction 2 Data Administrative employer–employee linked data World Bank GFDD database European bank reports 3 The contribution of financiers’ earnings to inequality and its asymmetry in upswings and downswings Less finance, less inequality? The asymmetry of the redistribution of earnings through financialization 4 Finance, regulation, and inequality Capital requirements and inequality The bonus cap 5 Conclusion Appendices A1 Data description A2 Supplementary tables and figures Reference

The Great Separation: Top Earner Segregation at Work in High-Income Countries

Analyzing linked employer-employee panel administrative databases, we study the evolving isolation of higher earners from other employees in eleven countries: Canada, Czechia, Denmark, France, Germany, Hungary, Japan, Norway, Spain, South Korea, and Sweden. We find in almost all countries a growing workplace isolation of top earners and dramatically declining exposure of top earners to bottom earners. We compare these trends to segregation based on occupational class, education, age, gender, and nativity, finding that the rise in top earner isolation is much more dramatic and general across countries. We find that residential segregation is also growing, although more slowly than segregation at work, with top earners and bottom earners increasingly living in different distinct municipalities. While work and residential segregation are correlated, statistical modeling suggests that the primary causal effect is from work to residential segregation. These findings open up a future research program on the causes and consequences of top earner segregation.En nous appuyant sur des données administratives longitudinales employeur–employés, nous analysons l’évolution de la ségrégation sociale des salariés à hauts salaires dans onze pays: Allemagne, Canada, Corée du Sud, Danemark, Espagne, France, Hongrie, Japon, Norvège, République tchèque et Suède. Nous constatons dans presque tous les pays une forte augmentation de l’entre soi des salariés bien payés sur le lieu de travail et une diminution spectaculaire de leur exposition aux bas salaires. Nous comparons ces tendances à l’évolution de la ségrégation fondée sur la catégorie sociale, l’éducation, l’âge, le sexe et le statut migratoire, et nous constatons que l’augmentation de l’entre soi des hauts salaires est celle qui est la plus prononcée et la plus générale. Nous montrons que la ségrégation résidentielle se développe aussi, bien que plus lentement que la ségrégation au travail, avec les hauts et les bas salaires vivant de plus en plus dans des municipalités distinctes. Ségrégation au travail et ségrégation résidentielle sont corrélées. Mais nos modèles statistiques suggèrent aussi que la principale relation de causalité va de la ségrégation au travail vers la ségrégation résidentielle. Ces résultats ouvrent la voie à un futur programme de recherche sur les causes et les conséquences de la ségrégation des hauts salaires.1 Introduction 2 From ethnic residential segregation to earnings segregation at work 3 Administrative data for estimating exposure measures 4 A strong increase in earnings segregation at work 5 A robust trend 17 French robustness tests 6 A specific trend 7 The link between work and residential segregation 8 Elements for a research program on the causes and consequences of increasing segregation at work The roots of growing earnings segregation at work The consequences of growing earnings segregation at work Appendices A1 Data sources and sample definition A2 Demonstration of the symmetry of relative exposure gRh = hRg A3 Figure construction A4 French robustness checks Supplementary figures and tables Reference

Structural Exchange Pays Off: Reciprocity in Boards and Executive Compensations in US Firms (1990–2015)

We study the influence of the corporate board network on executive pay for 3,395 US firms over the period from 1990 to 2015. Drawing on structural anthropology and social exchange theory, we identify three elementary structures through which the interlocking network captures an obvious form of objective reciprocity between executives from different firms: restricted exchange, when two executives sit on each other’s respective boards; delayed exchange, when y sits on the board of x after the end of x’s mandate on the board of y ; and generalized exchange, when x sits on the board of y, who sits on the board of z, who sits on the board of x. Our results suggest that these ties, although not very common, are more frequent than those calculated by chance. We also find that the three structures of reciprocity have a positive impact on executive pay, especially on bonuses and total cash. We use the Sarbanes-Oxley Act (2002) as a natural experiment to confirm our first findings. The impact on pay disappears after 2004, once these types of exchanges are constrained. Although linked to executive pay, these structures are not tied to any indicator of firm performance. This leads us to interpret them as a rent extraction phenomenon.Nous étudions l’influence du réseau des conseils d’administration sur la rémunération des dirigeants de 3 395 entreprises américaines entre 1990 et 2015. En nous appuyant sur l’anthropologie structurelle et la théorie de l’échange social, nous identifions trois structures élémentaires au sein du réseau interlock qui signent une forme évidente de réciprocité objective entre dirigeants d’entreprises différentes : l’échange restreint, lorsque deux dirigeants siègent aux conseils d’administration respectifs de l’autre ; l’échange différé, lorsque y siège au conseil d’administration de x à la fin du mandat de x au conseil d’administration de y ; l’échange généralisé, lorsque x siège au conseil d’administration de y qui siège au conseil d’administration de z qui siège d’administration au conseil de x. Nos résultats indiquent que ces liens, bien que peu communs, sont plus fréquents que ceux calculés par hasard. Nous constatons également que les trois structures de réciprocité ont un impact positif sur la rémunération des dirigeants, en particulier sur les primes et le total cash. Nous utilisons la loi Sarbanes-Oxley (2002) comme une expérience naturelle pour confirmer nos premiers résultats. L’impact sur les rémunérations disparaît après 2004, une fois ces types d’échange bridés. Bien qu’elles soient liées à la rémunération des dirigeants, ces structures ne sont liées à aucun indicateur de rendement de l’entreprise. Cela nous amène à les interpréter comme un phénomène d’extraction de rente.1 Introduction 2 Theory: From elementary social exchange to executive solidarity Corporate remuneration: Research state of the art From to kinship to inter-board solidarity A natural experiment in reciprocal exchange among boards 3 Data, modeling equations, and other variables Data From board composition to executive cycles Modeling equations Variables 4 Results Tie dynamics Reciprocities and executive pay Are these networks effects rent extraction? 5 Discussion: A tip of the iceberg phenomenon Appendix Reference

The French and North American revolutions in comparative perspective

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Living through Lockdown: Social Inequalities and Transformations during the COVID-19 Crisis in France

This working paper offers an overview of the first stage of the Coping with Covid (CoCo) project, which tracks the behaviors and attitudes of a representative panel of the French metropolitan population during the COVID-19 lockdown. We conducted five survey waves and administered daily journals of open-ended responses between April and June 2020 among a sample of 1,216 people from a pre-existing panel (ELIPSS). Earlier surveys of this sample allowed us to better contextualize changes that may have occurred during this unusual period. We outline four experiential dimensions during the lockdown period: relation to work, everyday activities and time use, self-assessed health and well-being, and the framing of the pandemic crisis. What we found follows traditional inequality patterns and also reveals some unexpected changes in social practices and attitudes

La France confinée: Anciennes et nouvelles inégalités

This chapter offers an overview of the first stage of the Coping with Covid (CoCo) project, which tracks the behaviors and attitudes of a representative panel of the French metropolitan population during the COVID-19 lockdown. We conducted five survey waves and administered daily journals of open-ended responses between April and June 2020 among a sample of 1,216 people from a pre-existing panel (ELIPSS). Earlier surveys of this sample allowed us to better contextualize changes that may have occurred during this unusual period. We outline four experiential dimensions during the lockdown period: relation to work, everyday activities and time use, self-assessed health and well-being, and the framing of the pandemic crisis. What we found follows traditional inequality patterns and also reveals some unexpected changes in social practices and attitudes