The Effects of Managers’ Business Education on Wages and the Labor Share in the US and Denmark
Daron Acemoglu, Alex Xi He & Daniel le Maire
We provide evidence that CEOs with a business degree reduce wages and the labor share in the US and Denmark. Firms appointing business managers are not on differential trends and do not enjoy higher output, investment, or employment growth thereafter. Using an IV strategy based on the composition of the board of directors at the time of new appointments, these appear as causal effects. Exploiting exogenous export shocks, we establish that a key mechanism for these wage effects is changes in rent-sharing practices and provide evidence suggesting that these effects are driven by business managers prioritizing shareholder value.
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