Why Are Wages So High in Finance?

Corporations are often characterized as evil entities that exploit workers. But in fact they enable firms to provide job security and thus serve the important role of minimizing risk for individual employees.

In this episode of All Else Equal: Making Better Decisions, hosts and finance professors Jonathan Berk and Jules van Binsbergen explore how corporations set employees’ wages based on their job performance while still providing job security by comparing it to an insurance contract. “I think, in fact, you could think of corporations as entities that insure workers,” says Jonathan Berk.

Also in this episode, Jonathan and Jules talk about bankruptcy, house fires, and why your supervisor hasn’t fired that one annoying coworker who doesn’t do anything.

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Find All Else Equal on the web: https://www.gsb.stanford.edu/business-podcasts/all-else-equal-making-better-decisions

All Else Equal: Making Better Decisions Podcast is a production of Stanford Graduate School of Business and is produced by University FM.

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