Wages and Human Capital in Finance: International Evidence, 1970–2011

Ariell Reshef 1, 2, 3 Hamid Boustanifar 4 Everett Grant 5
1 CES - Centre d'économie de la Sorbonne
2 PSE - Paris School of Economics
3 CNRS - Centre National de la Recherche Scientifique
4 BI Norwegian Business School [Oslo]
5 Federal Reserve Bank of Dallas
Abstract : We study the allocation and compensation of human capital in the finance industry in a set of developed economies in 1970-2011. Finance relative wages generally increase---but not in all countries, and to varying degrees. Trading-related activities account for 50% of the increases, despite accounting for only 13% of finance employment, on average. Financial deregulation is the most important factor driving up wages in finance; it has a larger effect in environments where informational rents and socially inefficient risk taking are likely to be prevalent. Differential investment in information and communication technology does not have causal explanatory power. High finance wages attract skilled international immigration to finance, raising concerns for "brain drain."
Keywords : allocation of talent wage inequality. Financial regulation informational rents
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Journal articles
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Contributor : Ariell Reshef <>
Submitted on : Monday, February 20, 2017 - 5:00:28 PM
Last modification on : Tuesday, January 30, 2018 - 5:50:04 PM

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Ariell Reshef, Hamid Boustanifar, Everett Grant. Wages and Human Capital in Finance: International Evidence, 1970–2011. Review of Finance, Oxford University Press (OUP): Policy F - Oxford Open Option D, 2017, pp.1-47. ⟨10.1093/rof/rfx011⟩. ⟨hal-01472400⟩

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