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Bankers and Their Bonuses

Author Info

Listed author(s):
  • Brian Bell
  • John Reenen

Abstract

The pay of financial sector workers ("bankers") is a focus of public concern especially since the onset of the financial crisis. We document the remarkable rise in the share of aggregate pay going to those at the very top of the distribution over the last decade in the UK and highlight the role of the financial sector. Rising bonuses paid to bankers accounted for around two-thirds of the increase in the national wage bill ("earnings pie") taken by the top one percent of workers since 1999. Surprisingly, even after the crisis bankers took at least as large a share of the earnings pie in 2011 as they did at the peak of the boom in 2007 and saw no worsening in their employment outcomes relative to other similar workers. Having described the scale of bankers' pay, we discuss the policy responses that have been proposed to address the issue such as transparency, numerical bonus targets, bonus clawbacks and taxation.

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File URL: http://hdl.handle.net/10.1111/ecoj.2014.124.issue-574
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Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 124 (2014)
Issue (Month): 574 (02)
Pages: 1-21

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Handle: RePEc:wly:econjl:v:124:y:2014:i:574:p:f1-f21
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Order Information: Web: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1468-0297

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Find related papers by JEL classification:
  • N0 - Economic History - - General
  • F3 - International Economics - - International Finance
  • G3 - Financial Economics - - Corporate Finance and Governance

References listed on IDEAS
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  1. Xavier Gabaix & Augustin Landier, 2008. "Why has CEO Pay Increased So Much?," The Quarterly Journal of Economics, Oxford University Press, vol. 123(1), pages 49-100.
  2. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747.
  3. Thomas Piketty & Emmanuel Saez & Stefanie Stantcheva, 2014. "Optimal Taxation of Top Labor Incomes: A Tale of Three Elasticities," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 230-271, February.
  4. Thomas Philippon & Ariell Reshef, 2012. "Wages and Human Capital in the U.S. Finance Industry: 1909--2006," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1551-1609.
  5. Steven N. Kaplan & Joshua Rauh, 2010. "Wall Street and Main Street: What Contributes to the Rise in the Highest Incomes?," NBER Chapters,in: Corporate Governance National Bureau of Economic Research, Inc.
  6. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," Post-Print halshs-00754875, HAL.
  7. Atkinson, A. B. & Piketty, Thomas (ed.), 2010. "Top Incomes: A Global Perspective," OUP Catalogue, Oxford University Press, number 9780199286898.
  8. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Bonuses: here to stay
    by chris in Stumbling and Mumbling on 2016-08-23 11:48:58
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