Hold-up in finance. The conditions of possibility of high bonuses in financial industry
Compensations in financial industry are sometimes very high and the comprehension of their mode of formation is a key for the comprehension of the wage labor nexus. The fact that some employees gain the power to make holdups constitutes a better explanation than optimal incentive to make efforts. An exemplary case of holdup enables us to understand its mechanism. Two heads of a dealing room of a large bank were granted ten and seven million euros of bonus for the year 2000 as they threat to leave to rival bank with their entire team. This case makes it possible to outline the mechanism of holdup : the control of transferable assets enables to threaten the firm of damages if she does not accept a favorable renegotiation for the employee. This mechanism is all the more frequent as protections are relatively inefficient. As a result, we draw a different view of the financial labor market : less like a market of persons and personal competences than like a market of firms’ assets, collectively produced and carried by people who organize their transfer.