Labor market key to reducing excessive risk taking by bankers

Excessive bonuses and risk taking in the financial sector are inherent in the competition on the labor market for bankers. This is argued by Anton van Boxtel in his PhD thesis, which he will defend at Tilburg University on March 16. Given this situation, reducing excessive risk through taxes or bonus caps is very hard to achieve. Measures reducing labor market mobility might provide a solution. “Making it harder for bankers to switch from one employer to the next will make it cheaper for banks to keep their employees. This in turn may lead to lower bonuses and thus to less risk,” Van Boxtel states. —> Read More