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Wall Street Occupations

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  • ULF AXELSON
  • PHILIP BOND

Abstract

type="main"> Many finance jobs entail the risk of large losses, and hard-to-monitor effort. We analyze the equilibrium consequences of these features in a model with optimal dynamic contracting. We show that finance jobs feature high compensation, up-or-out promotion, and long work hours, and are more attractive than other jobs. Moral hazard problems are exacerbated in booms, even though pay increases. Employees whose talent would be more valuable elsewhere can be lured into finance jobs, while the most talented employees might be unable to land these jobs because they are “too hard to manage.”

Suggested Citation

  • Ulf Axelson & Philip Bond, 2015. "Wall Street Occupations," Journal of Finance, American Finance Association, vol. 70(5), pages 1949-1996, October.
  • Handle: RePEc:bla:jfinan:v:70:y:2015:i:5:p:1949-1996
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    File URL: http://hdl.handle.net/10.1111/jofi.12244
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    References listed on IDEAS

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    Cited by:

    1. Brei, Michael & Ferri, Giovanni & Gambacorta, Leonardo, 2018. "Financial structure and income inequality," CEPR Discussion Papers 13330, C.E.P.R. Discussion Papers.
    2. Andrew Ellul & Marco Pagano & Annalisa Scognamiglio, 2017. "Career Risk and Market Discipline in Asset Management," CSEF Working Papers 489, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Mar 2019.
    3. Giovanni Marin & Francesco Vona, 2017. "Finance and the Misallocation of Scientific, Engineering and Mathematical Talent," Documents de Travail de l'OFCE 2017-27, Observatoire Francais des Conjonctures Economiques (OFCE).
    4. Radoslawa Nikolowa & Daniel Ferreira, 2018. "How to Sell Jobs," Working Papers 846, Queen Mary University of London, School of Economics and Finance.
    5. repec:eee:jaecon:v:67:y:2019:i:1:p:98-119 is not listed on IDEAS
    6. Matthias Efing & Harald Hau & Patrick Kampkktter & Jean-Charles Rochet, 2018. "Bank Bonus Pay as a Risk Sharing Contract," Working Papers hal-01847442, HAL.
    7. Francesco D'Acunto & Laurent Frésard, 2018. "Finance, Talent Allocation, and Growth," CESifo Working Paper Series 6883, CESifo Group Munich.

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