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

80 Pages Posted: 4 Nov 2014 Last revised: 13 Dec 2016

See all articles by Hamid Boustanifar

Hamid Boustanifar

EDHEC Business School; BI Norwegian Business School

Everett Grant

Federal Reserve Banks - Federal Reserve Bank of Dallas

Ariell Reshef

Paris School of Economics (PSE); CNRS; Université Paris I Panthéon-Sorbonne - CES/CNRS; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2016

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 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: Financial regulation, allocation of talent, excess wage, wage inequality

JEL Classification: G2, J2, J3

Suggested Citation

Boustanifar, Hamid and Grant, Everett and Reshef, Ariell, Wages and Human Capital in Finance: International Evidence, 1970-2011 (October 1, 2016). Available at SSRN: https://ssrn.com/abstract=2518277 or http://dx.doi.org/10.2139/ssrn.2518277

Hamid Boustanifar (Contact Author)

EDHEC Business School ( email )

393 Promenade des Anglais – BP 3116
Nice, 06202
France

BI Norwegian Business School ( email )

Oslo
Norway

Everett Grant

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Ariell Reshef

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

CNRS ( email )

France

Université Paris I Panthéon-Sorbonne - CES/CNRS ( email )

106 bv de l'Hôpital
Paris, 75013
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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