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Compensation in the Financial Sector: Are all Bankers Superstars?

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  • Célérier, C.

Abstract

Based 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.

Suggested Citation

  • Célérier, C., 2010. "Compensation in the Financial Sector: Are all Bankers Superstars?," Working papers 294, Banque de France.
  • Handle: RePEc:bfr:banfra:294
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    References listed on IDEAS

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    1. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
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    More about this item

    Keywords

    Finance; compensation ; wage distribution ; wage structure ; incentives; superstars;

    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 - - Personnel Economics

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