Bankers and Their Bonuses

21 Pages Posted: 25 Feb 2014

See all articles by Brian Bell

Brian Bell

University of Oxford - Department of Economics; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Date Written: February 2014

Abstract

We analyse the role of financial sector workers in the huge rise of the share of earnings going to those at the very top of the pay distribution in the UK. Rising bankers’ bonuses accounted for two‐thirds of the increase in the share of the top 1% after 1999. Surprisingly, bankers’ share of earnings showed no decline between the peak of the financial boom in 2007 and 2011, three years after the global crisis began. Nor did bankers’ relative employment position deteriorate over this period. We discuss proposed policy responses such as transparency, bonus ‘clawbacks’, numerical bonus targets and tax.

Suggested Citation

Bell, Brian and Van Reenen, John Michael, Bankers and Their Bonuses (February 2014). The Economic Journal, Vol. 124, Issue 574, pp. F1-F21, 2014. Available at SSRN: https://ssrn.com/abstract=2400788 or http://dx.doi.org/10.1111/ecoj.12101

Brian Bell

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6976 (Phone)
+44 20 7955 6848 (Fax)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom
+44 20 7240 6740 (Phone)
+44 20 7240 6136 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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