US Investors as Exporters of the 'Winner-Take-All-Economy': Preliminary Evidence and Outline of a Research Agenda

Renira Angeles, Jonathan Hopkin, Lukas Linsi

Research output: Working paperAcademic


The work of Thomas Piketty and his collaborators has drawn public attention on the stark increases in top incomes. A crucial aspect of the phenomenon,
which Piketty et al. do not explain, however, are the significant cross-national differences in the remuneration of top executives. In this article, we propose a political economic theory of contingent policy diffusion, which can account for some of the cross-national patterns. We argue that the sharp rise in top incomes since the 1980s are primarily a product of the US political economy, which then, in a second stage, has been exported to other advanced economies through the expansion of US multinational companies and financial investors abroad. Our theoretical argument is thus centered on the notion that US investors abroad can act as conduits for the transmission of a US-style culture of executive remuneration practices. As such, we
expect top incomes in other advanced economies to increase as their exposure to US investors grows. At the same time, however, we posit that the size and significance of this effect crucially depends on the configuration of local political institutions. In particular, we argue that the presence of strong corporatist institutions can act as a
barrier to US-investment-induced pressures to grant more generous compensation packages. The first part of the article elaborates this argument. The second part provides suggestive preliminary evidence in support of our key claims based on the analysis of the association between foreign direct investment inflows from the USA
and the evolution of top income shares among OECD economies. Finally, the last
part gives a short overview of the remaining research agenda and the further work we plan to accomplish over the coming months in order to elaborate and corroborate the presented hypotheses.
Original languageEnglish
Number of pages36
Publication statusPublished - 2016
Externally publishedYes

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