Elaine S. Pak

• Claudine Gartenberg and Elaine Pak (2024), Internal and Market Pay References in Firms, . Abstract

  We examine how firms balance internal and external reference points when determining employee pay. Analyzing nearly 19 million confidential U.S. employee records, our analysis reveals three key findings. First, the relative sensitivity of pay to internal over external benchmarks increases with firm innovation intensity, employee skill level, and the combination of the two. Second, this relationship appears at least partly causal: we document similar patterns using an instrumental variables analysis based on regional inflation shocks and a differences-indifferences analysis of CEO transitions. Third, firms with a stronger internal pay orientation produce more and higher-quality patents, including more breakthrough innovations. Altogether, our findings reveal that, while some firms maintain close market alignment, knowledge-intensive firms appear to decouple pay from market forces. This is particularly the case for their skilled workers, consistent with firms prioritizing internal social dynamics in contexts where cooperation and creativity are important for value creation.

• Claudine Gartenberg and Elaine Pak (Under Review), Corporate Ownership and Employee Compensation. Abstract

  The rise of active corporate owners has raised questions about their influence on stakeholder outcomes, particularly regarding employee compensation. Using detailed compensation records from 20 million employees across 896 U.S. firms, we document that firms controlled by active owners—hedge funds and private equity firms—pay 2 to 4% less for comparable work relative to other firms. These differences arise through lower base pay, particularly for lower-skilled workers, as well as flatter incentive structures, particularly for higher-skilled workers. These compensation differences are concentrated among workers in routine jobs, with active owners paying 2-5 % less and 7-20% lower bonus-to-base ratio for comparable work, while showing minimal difference among workers in non-routine positions. Through analyses of private equity buyouts, matched comparisons, and lead-lag tests, our evidence suggests these patterns reflect, at least partially, an ownership treatment effect. Altogether, our results suggest that these owners either place less value on routine work or substitute financial incentives with input monitoring and control. These patterns suggest that differences in ownership structure manifest not only in firm strategy and governance, but also in fundamental approaches to motivating and managing employees.

Past Courses

• MGMT1010 - Intro To Management

  We all spend much of our lives in organizations. Most of us are born in organizations, educated in organizations, and work in organizations. Organizations emerge because individuals can't (or don't want to) accomplish their goals alone. Management is the art and science of helping individuals achieve their goals together. Managers in an organization determine where their organization is going and how it gets there. More formally, managers formulate strategies and implement those strategies. This course provides a framework for understanding the opportunities and challenges involved in formulating and implementing strategies by taking a "system" view of organizations,which means that we examine multiple aspects of how managers address their environments, strategy, structure, culture, tasks, people, and outputs, and how managerial decisions made in these various domains interrelate. The course will help you to understand and analyze how managers can formulate and implement strategies effectively. It will be particularly valuable if you are interested in management consulting, investment analysis, or entrepreneurship - but it will help you to better understand and be a more effective contributor to any organizations you join, whether they are large, established firms or startups. This course must be taken for a grade.

Knowledge @ Wharton

• The Real Estate Market Survived Until 2025. What’s Next for the Year Ahead?, Knowledge @ Wharton - 01/07/2025
• AI in 2025: What Challenges Lie Ahead?, Knowledge @ Wharton - 01/07/2025
• Jeremy Siegel: 2025 Outlook for Stocks and the Economy, Knowledge @ Wharton - 01/07/2025
• What’s Ahead for Real Estate in 2025?, Knowledge @ Wharton - 01/07/2025
• Confidence in Cryptocurrency | David Reibstein and John Zhang (Part 1), Knowledge @ Wharton - 01/07/2025
• What’s Ahead for the Economy in 2025, Knowledge @ Wharton - 01/06/2025
• How Did AI Grow in 2024 and What’s in Store for 2025?, Knowledge @ Wharton - 01/02/2025
• Overwhelmed by Too Many Choices When Shopping? Wharton Retail Expert Weighs In, Knowledge @ Wharton - 12/19/2024
• Michael Lee, Oatly North America’s EVP & Executive Creative Director, Knowledge @ Wharton - 12/19/2024
• Why Anchor Institutions Are Vital to Local Economies, Knowledge @ Wharton - 12/17/2024