Bankers and Their Bonuses


  • This is a revised version of the unpublished working paper by Bell and Van Reenen (2010). We are grateful to the Editor, an anonymous referee, Tony Atkinson, Tim Besley, Luis Garicano, Sam Harrington and Steve Machin for many helpful comments. This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the Controller of HMSO and Queen's Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research data sets which may not exactly reproduce National Statistics aggregates. This research was funded by the Economic and Social Research Council at the Centre for Economic Performance.
  • Correction Note: This article was first published online on the 29th of October 2013, under a subscription publication licence. The article has since been made OnlineOpen, and the copyright line and licence statement was therefore updated in June 2014.


We analyse the role of financial sector workers in the huge rise of the share of earnings going to those at the very top of the pay distribution in the UK. Rising bankers’ bonuses accounted for two-thirds of the increase in the share of the top 1% after 1999. Surprisingly, bankers’ share of earnings showed no decline between the peak of the financial boom in 2007 and 2011, three years after the global crisis began. Nor did bankers’ relative employment position deteriorate over this period. We discuss proposed policy responses such as transparency, bonus ‘clawbacks’, numerical bonus targets and tax.