Managers and Wage Policies


  • We thank a coeditor and an anonymous referee, as well as Ana Rute Cardoso, Daniel Hamermesh, Miguel Portela, Richard Upward, participants at seminars at Minho and Bergen, at the COST workshop on “Firms and Wages: New Research Using Linked Employer-Employee Data” in Budapeste, and at the Canadian Economic Association Annual Conference in Toronto for valuable comments and suggestions. The views expressed in this paper are exclusively those of the authors and not those of the Inter-American Development Bank.


Do individual top managers matter for wages and wage policies? Are there general differences in “style” among managers with respect to worker compensation? To shed light on these questions, we exploit a large panel dataset from Portugal that allows us to match workers, firms, and managers, and follow the movements of the latter across different firms over time. While accounting for the effect of worker and firm heterogeneity, we estimate the role of top manager fixed effects in determining wages and wage policies. The estimates suggest that (i) top managers have a significant influence on wages and wage policies; (ii) there exists different managerial “styles”; and (iii) managers’ (observable) attributes matter for worker compensation.