Wages and incentives in the late 19th and early 20th century Australian Banking Industry

Andrew Seltzer

International Journal of Development and Conflict, 2011, vol. 1, issue 1, 11-26

Abstract: This paper summarises research on the mechanisms used by banks to align the interests of their workers with the goal of long-term profit maximization. Banking was characterised by moral hazard, and the monitoring technology of the period was far from perfect. The banks incentivized the workers by establishing well-defined career structures within internal labour markets, by strongly tying salary to tenure and attaching large salary increases to promotion. A worker who quit or was dismissed was punished with a considerable loss of lifetime earnings. Conversely, one who exceeded the norms was rewarded by substantial earnings growth associated with seniority and promotion.

Keywords: Compensation; careers; banking; personnel (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:gok:ijdcv1:v:1:y:2011:i:1:p:11-26

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