EconPapers    
Economics at your fingertips  
 

Taxation and Regulation of Bonus Pay

Timothy Besley () and Maitreesh Ghatak ()

No 8532, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore the consequence for taxation and regulation of bonus pay when investors are protected by taxpayers from downside risk. The paper develops a model where workers in financial sector firms make decisions about effort and risk-taking which are influenced by the structure of bonus pay. Bailouts lead to too little effort, too much risk taking and increase inequality. We show that the optimal structure of bonuses can be implemented by a combination of a regulation on the structure of bonuses and a tax on their level.

Keywords: bonus; incentives; taxation (search for similar items in EconPapers)
JEL-codes: D53 D86 H21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-bec, nep-hrm, nep-lab and nep-reg
Date: 2011-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=8532 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Taxation and Regulation of Bonus Pay (2011) Downloads
Working Paper: Taxation and regulation of bonus pay (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8532

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=8532

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().

 
Page updated 2019-10-06
Handle: RePEc:cpr:ceprdp:8532