Learning from the past: Trends in executive compensation over the 20th century

Carola Frydman*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


In recent years, a large academic debate has tried to explain the rapid rise in CEO pay experienced over the past three decades. In this article, I review the main proposed theories, which span views of compensation as the result of a competitive labor market for executives to theories based on excess of managerial power. Some of these hypotheses have found support in cross-sectional evidence, but it has proven more difficult to determine which factors have caused the observed changes in pay over time. An alternative strategy is to evaluate the fit of plausible explanations out of sample by contrasting them with the evolution in executive pay and the market for managers during earlier time periods. A case study of General Electric suggests that evidence for earlier decades can speak of the recent trends and reveals the limitations of current explanations to address the long-run data.

Original languageEnglish (US)
Pages (from-to)458-481
Number of pages24
JournalCESifo Economic Studies
Issue number3-4
StatePublished - Dec 4 2009


  • Corporate governance
  • Executive compensation
  • Managerial incentives
  • Market for managers

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Economics and Econometrics


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