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Wall Street occupations

Listed author(s):
  • Ulf Axelson
  • Philip Bond
Registered author(s):

    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.”

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    File URL: http://eprints.lse.ac.uk/37448/
    File Function: Open access version.
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    Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 37448.

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    Date of creation: Oct 2015
    Publication status: Published in Journal of Finance, October, 2015, 70(5), pp. 1949-1996. ISSN: 0022-1082
    Handle: RePEc:ehl:lserod:37448
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