Compensation in the Financial Sector: Are all Bankers Superstars?
AbstractBased on a survey among French engineers, I find that employees in the financial sector are highly paid. I also find large pay differences within the sector and that a large share of compensation is variable. I consider three potential models accounting for these facts: a model of superstars (Rosen, 1981), a model of compensating wage differential (Lucas, 1977), and a model of moral hazard (Laffont and Martimort, 2002). I investigate and test the empirical implications of these models. I conclude that the model of superstars fits better the data than the models of moral hazard and compensating wage differential.
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Bibliographic InfoPaper provided by Banque de France in its series Working papers with number 294.
Length: 49 pages
Date of creation: 2010
Date of revision:
Finance; compensation ; wage distribution ; wage structure ; incentives; superstars;
Find related papers by JEL classification:
- G2 - Financial Economics - - Financial Institutions and Services
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
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