Rise of the 'Quants' in Financial Services: Regulation and Crowding Out of Routine Jobs

53 Pages Posted: 8 Aug 2018 Last revised: 28 Aug 2020

See all articles by Christos Makridis

Christos Makridis

Stanford University; Institute for the Future (IFF), Department of Digital Innovation, School of Business, University of Nicosia; Arizona State University (ASU); Department of Veterans Affairs (VA)

Alberto G. Rossi

Georgetown University

Date Written: July 22, 2018

Abstract

We document three stylized facts regarding employment in financial services: (a) the share of science, technology, engineering, and math (STEM) workers grew by 30% between 2011 and 2017; (b) while the earnings premium of working in finance has grown, the STEM premium in finance has declined since 2011; and (c) regulatory restrictions in the financial services have grown faster than other sectors. We investigate three economic mechanisms underlying the employment patterns: (a) capital-skill complementarity, (b) relabeling of non-STEM into STEM degree programs, and (c) regulation. We show that only the rise in regulation can explain these joint dynamics.

Keywords: fintech, financial services, STEM workers, regulation, STEM

JEL Classification: G21, G23, G38, J23, J31

Suggested Citation

Makridis, Christos and Rossi, Alberto G., Rise of the 'Quants' in Financial Services: Regulation and Crowding Out of Routine Jobs (July 22, 2018). Available at SSRN: https://ssrn.com/abstract=3218031 or http://dx.doi.org/10.2139/ssrn.3218031

Christos Makridis (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Institute for the Future (IFF), Department of Digital Innovation, School of Business, University of Nicosia ( email )

Nicosia, 2417
Cyprus

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Department of Veterans Affairs (VA) ( email )

810 Vermont Avenue NW
Washington, DC 20420
United States

Alberto G. Rossi

Georgetown University ( email )

McDonough School of Business
Georgetown University
Washington, DC 20057
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
201
Abstract Views
1,613
Rank
273,540
PlumX Metrics