Reservation wage levels in UK and German financial services sectors

Although expenditure on wages represents a major element of costs in financial services firms, there is a dearth of studies analysing wage levels in the sector. This paper examines reservation wage levels in the sector by utilising maximum likelihood selection and stochastic frontier methodologies in two leading European economies: UK and Germany. Our results show that wage achievement is higher in the UK than Germany. At first glance, this seems counter-intuitive, given that actual wage costs and the overall cost–income ratio is higher in Germany than the UK.