Wage ratio caps prevent the wages of all employees from exceeding a maximum of a fixed multiple of the wages of the lowest paid employee in a given institution.
Wage ratio caps can apply to both the public and private sector. In some places they have been introduced as company policy. Though they are yet to have been implemented, they have also been proposed as legislation in some countries.
What effect does a wage ratio cap have on the efficency of allocation of labour?
I'm having difficulty with comparing this to other policies which directly represent price ceilings.
I see one main difference with pay ratios: companies can always compete to provide high pay for their executives. A company can always offer a more competitive wage for its executives by paying its lowest earning workers more. This is different to price controls like a rent control, where a landlord does not have access to a lever which raises the rent they can charge.
I would accept an answer that can show that the policy has the same effects as a price ceiling, but I'd also like to see explanation of the consequences for the labour market.