Does employee ownership promote workers’ wealth accumulation? the case of stock options

Abstract

ABSTRACT This study examines the consequences of employee ownership for workers’ economic outcomes, with a focus on wealth accumulation. Using large-scale, nationally representative data from the US Survey of Consumer Finances, this study focuses on stock options as a pathway into employee ownership and examines the association between stock options and wealth. A difference-in-differences analysis shows that employees with stock options accumulate greater wealth than employees who do not receive stock options, and the differences are larger at longer tenure. The differences remain statistically significant after accounting for a wide range of job characteristics and sociodemographic attributes. Furthermore, the wealth gap between employees with and without stock compensation widened over time. Finally, results show that stock options are more prevalent among already more socioeconomically advantaged employees. Together, these findings suggest that broadening employee ownership – through stock options or similar avenues – might help in addressing increasing wealth inequality in the United States by giving workers, especially middle- and lower-income workers, a stake in US economic growth.