Claudine Gartenberg and Elaine Pak (2026), Internal versus Market Pay References in Knowledge-Intensive Firms, Organization Science.
Abstract: How do firms balance market competitiveness with internal cohesion when setting employee pay? We examine this question using confidential compensation data on 19 million U.S. employees across 479 firms varying in knowledge intensity. We construct precise pay reference groups: internal benchmarks based on skill-equivalent peers across functions and market benchmarks based on same occupation, skill level, and region at other firms. We find that in low knowledge-intensity firms, pay is equally sensitive to both internal and market benchmarks, whereas in high knowledge-intensity firms, pay becomes decoupled from market forces and aligns with internal benchmarks. Internal pay alignment also increases following chief executive officer transitions that prioritize innovation. These patterns are driven by high-skilled employees in roles requiring complex problem-solving and collaboration. Moreover, firms with greater internal pay alignment generate more patents, including breakthrough innovations. Altogether, our findings reveal that although 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 complex problem-solving and collaboration are important for value creation.
Claudine Gartenberg and Elaine Pak (2026), More Monitoring, Less Pay: Active Ownership and Employee Compensation, Management Science, Forthcoming ().
Abstract: The rise of active owners—hedge funds and private equity firms—has raised questions about the influence of corporate owners on employee compensation. Prior research documents that active owners reduce overall compensation through workforce restructuring and slower wage growth. What remains unexplored is whether active owners also pay less for comparable work: whether they compensate the same jobs differently than other owners. Using detailed compensation from over 20 million employee records across 896 U.S. firms, we compare pay within narrowly defined labor markets that hold constant year, region, occupation, and skill level. We find that firms with active owners pay 2 to 4% less for comparable work than other firms. These differentials manifest both as lower base salary and flatter incentive pay, and appear to reflect, at least in part, an owner treatment effect. Notably, the effects are concentrated in more monitorable contexts, including routine jobs, jobs with quantifiable outputs, and those in less knowledge-intensive industries. These patterns are consistent with active owners substituting compensation-based incentives with managerial oversight, particularly in quantifiable and routine settings. This suggests that, as work becomes more measurable, firm ownership may play a greater role in shaping employee outcomes.
Elaine Pak, Prasanna Tambe, David Hsu, Startup Jobs in a Polarized Era: How Dobbs v. Jackson Shifted the Geography of Remote and In-Person Applications.
Abstract: We examine how local political shifts affect startup applicant behavior, using data from a leading job search platform for technology startups. Analyzing patterns around the Supreme Court's Dobbs v. Jackson ruling, we find that applications to in-person jobs in trigger-law states (where abortion became illegal) dropped by 9% relative to states where abortion remained legal. Applications to remote jobs in these states, however, were unaffected. Following the ruling, startups in trigger-law states had to offer 9.6% higher compensation to sustain applicant interest. These findings indicate that while unexpected shifts in the local political environment may adversely impact startups' talent attraction, flexible job designs that leverage remote work and higher salary may offset this effect.
