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Wall Street occupations

Axelson, Ulf and Bond, Philip (2015) Wall Street occupations. Journal of Finance, 70 (5). pp. 1949-1996. ISSN 0022-1082

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Identification Number: 10.1111/jofi.12244

Abstract

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.”

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1111/(IS...
Additional Information: © 2015 American Finance Association
Subjects: H Social Sciences > HG Finance
Sets: Departments > Finance
Collections > Economists Online
Date Deposited: 01 Jun 2015 09:45
Last Modified: 29 Feb 2016 16:35
URI: http://eprints.lse.ac.uk/id/eprint/37448

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