Seminario di Maria Navarro Paniagua

ORE 12.30 SALA SEMINARI – I° PIANO, PALAZZO LEVI CASES, VIA DEL SANTO 33

15.11.2016

Hollywood’s Wage Structure and Discrimination

Seminario di Maria Navarro Paniagua, Lancaster University

During the last decades, a substantial literature has emerged on the so-called Economics of Superstars, i.e. the economics of people that earn enormous amounts of money in comparison to their colleagues, dominating the field in which they participate (Rosen, 1981). This literature has shed light on wage inequality and talent distribution in several labour markets, including sports, music and finance (Brandes et al., 2008; Franck and Nuesch, 2012; Giles, 2006; Ginsburgh and van Ours, 2003; Hamlen, 1991; Krueger, 2005; Lucifora and Simmons, 2003; MacDonald, 1988). Interestingly, a labour market that has not been explored in this context so far is that for Hollywood actors.
The lack of research in this area is unexpected for at least two reasons. First, the Hollywood movie industry employs more than 2 million workers per year, and is the largest of the creative industries - a sector that generates about 4 percent of the US GDP (National Endowment for the Arts and the US Bureau of Economic Analysis, 2012).Second, Hollywood constitutes an ideal example of the Superstar phenomenon: Hollywood stars comprise only a small fraction of the total number of Hollywood actors who appear in most of the movies released every year, and earn massively higher incomes than their peers even though, in some cases, differences in acting skills appear to be small (Terviö, 2011).
The first aim of this paper is to fill the existing gap in the literature by analysing a comprehensive dataset on wages and their determinants taken from IMDb and Box Office Mojo. We start our analysis by providing a pictorial representation of the long-run evolution of mean wages (adjusted for inflation). We show that, on average, Hollywood wages have been very high -consistent with the high incomes of the Superstar framework-, and display an upward trend throughout most of the twentieth century. We then proceed to explore the structure of wages. We find that the top 25 percent of actors earns between 50 and 80 percent of total wages, and that this fraction has decreased since the mid-1980s. Furthermore, by examining various measures of overall and upper tail wage inequality, we find that actors in the top 25 percent of the wage distribution earn about 5 times more than actors in the lower 25 percent of the distribution. The second contribution of this paper is to investigate the existence of gender wage differences among Hollywood actors and actresses. The speech of Patricia Arquette at the Oscars 2015, highlighted the growing discontent among actresses, and further comments followed from Meryl Streep, Charlize Theron and Jennifer Lawrence over the topic of ‘equal pay for equal job’. This relates to the large literature in labour economics that explains gender wage differentials [see Blau and Kahn (2016) and Olivetti and Petrongolo (2016) for recent surveys]; and the non-negligible body of research that focuses on gender wage differentials among the highly paid (Bertrand and Hallock, 2001; Biddle and Hamermesh, 1998; Greg and Machin, 1993). We explore the dynamics of the gender gap in earnings since first movie appearance (as in Bertrand et al., 2010). Following previous studies, we conduct a Blinder-Oaxaca (1973) decomposition in order to investigate whether there are unexplained differences in the gender wage gap that can be attributed to discrimination.