Browsing by Subject "M52"

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  • Jokivuolle, Esa; Keppo, Jussi; Yuan, Xuchuan (2015)
    Bank of Finland Research Discussion Papers 5/2015
    Regulators restrict bankers’ risk-taking by bonus caps or deferrals. We derive a structural model to analyze these compensation regulations and show that for a risk-neutral banker subject to positive switching costs of reducing bank risk, a bonus deferral is impotent while a sufficiently tight bonus cap reduces risk-taking. The model suggests that a bonus cap that equals fixed salary (as in the EU) reduces risk on average by 13% under conservatively calibrated positive switching costs. Further, the bonus cap would have considerably reduced risk-taking incentives in most US banks that did poorly during the global financial crisis. We also show that the bonus deferral is effective if the banker is risk-averse and the switching costs are not too high.
  • Juurikkala, Tuuli; Lazareva, Olga (2006)
    BOFIT Discussion Papers 4/2006
    Published in Economics of Transition, Volume 20, Issue 1, pages 113-136, January 2012 as "Non-wage benefits, costs of turnover and labour attachment. Evidence from Russian firms"
    Just as in established market economies, many Russian firms provide non-wage benefits such as housing, medical care or day care to their employees.Interpreting this as a strategic choice of firms in an imperfect labor market, this paper examines unique survey data for 404 large and medium-size industrial establishments from 40 Russian regions.We find strong evidence that Russian industrial firms use social services to reduce the costs of labor turnover in the face of tight labor markets.The strongest effect is observed for blue-collar workers.We also find that the share of non-monetary compensation decreases with improved access to local social services. Keywords: Non-wage benefits, labor turnover, labor attachment, Russia JEL codes: J32, J33, J42, J63, M52, P31
  • Holz, Carsten A. (2014)
    BOFIT Discussion Papers 13/2014
    The purpose of this paper is to ascertain how wages are being determined in China during the reform period. The paper focuses on the development of the regulatory framework since 1978 and proceeds by examining official regulations regarding labor market institutions and wage setting, and by evaluating their potential implications for actual wage setting. JEL codes: J3, J30, J31, J4, J41, J45, M5, M52, M54, M55, P2, P23 Keywords: wage determination, labor market institutions, minimum wages, wage classification system, wage level and structure, labor contracts, collective bargaining, public sector wages, wage-performance link
  • Jones, Derek C.; Kalmi, Panu; Kato, Takao; Mäkinen, Mikko (2017)
    Bank of Finland Research Discussion Papers 33/2017
    Online First International Journal of Human Resource Management as "The Differing Effects of Individual and Group Incentive Pay on Worker Separation: Evidence using Finnish Panel Data".
    This paper investigates the role of individual incentive (II) and group incentive (GI) pay as determinants of worker separation. We use a large linked employer-employee panel data set for full-time male manufacturing workers during 1997-2006 from Finland. We follow actual job spells and switches of individual employees and define separation as worker exit from his current employer. The key finding for white-collar workers is that group incentive pay is associated significantly with increased probability of separation and hence diminished employment stability, but in large firms only. For blue-collar workers our results consistently indicate that individual incentive pay is associated with a decreased probability of separation and hence enhanced employment stability, both in small and large firms. Our finding that group incentive pay increases the risk of separation for white-collar workers is more consistent with theoretical work such as Lazear (2000) and Fehr and Gaechter (2000), while uncovering that individual incentive pay decreases employment stability for blue-collar workers supports theoretical work such as Parent (1999) and Paarsch and Shearer (2000).