Testing the Participation Constraint in the Executive Labour Market
- Publisher: Wiley
Exectuive pay, labour market, participation, managerial power
This paper examines the workings of the executive labour market in a panel of<br/>UK listed companies. Directors are found to move jobs regularly - both within<br/>companies and between companies. Consistent with an active labour market,<br/>directors who are underpaid relative to their comparable peers are particularly<br/>likely to leave for higher paying jobs in other companies. Those who move between<br/>companies secure more favourable terms than those who move within their firm<br/>- even when the move does not involve promotion. The evidence suggests that<br/>market forces, while far from the only consideration, do need to be incorporated<br/>into explanations of this sector of the labour market.