Law Commons^™

Globalization And The Provision Of Incentives Inside The Firm: The Effect Of Foreign Competition, Vincente Cuñat, Maria Guadalupe

Center for Contract and Economic Organization

This article studies the effect of changes in foreign competition on the structure of compensation and incentives of U.S. executives. We find that import penetration (instrumented with exchange rates and tariffs) leads to more incentive provision in a variety of ways. First, it increases the sensitivity of pay to performance. Second, it increases within-firm pay differentials between executive levels, with CEOs typically experiencing the largest wage increases. Finally, higher foreign competition is also associated with a higher demand for talent. These results suggest that increased foreign competition can explain some of the recent trends in compensation structures.

Constitutional Constraints On Redistribution Through Class Power, Mark Barenberg

Faculty Scholarship

My comments will not be so much a critique as an elaboration of the two papers, especially Professor Neuman's paper on United States (U.S.) law, since I am not an expert on German constitutional law. For those less familiar with U.S. law, my goal is to bring to light some additional elements of the U.S. constitutional tradition that impede the use of law to achieve economic equality-elements of U.S. constitutional law that reinforce the weak "general equality" principle of the Equal Protection Clause.2 I will use U.S. labor law as my vehicle for showing the variety of constitutional principles that …

Lifetime Employment: Labor Peace And The Evolution Of Japanese Corporate Governance, Ronald J. Gilson, Mark J. Roe

Faculty Scholarship

In Japan, large firms' relationships with their employees differ from those prevailing in large American firms. Large Japanese firms guarantee many employees lifetime employment, and the firms' boards consist of insider employees. Neither relationship is common in the United States.

Japanese lifetime employment is said to encourage firms and employees to invest in human capital. We examine the reported benefits of the firm's promise of lifetime employment, but conclude that it is no more than peripheral to human capital investments. Rather, the "dark" side of Japanese labor practice – constricting the external labor market – likely yielded the human capital …