The Revolving Door and Worker Flows in Banking Regulation

44 Pages Posted: 14 Jun 2014

See all articles by David O. Lucca

David O. Lucca

Federal Reserve Banks - Federal Reserve Bank of New York

Amit Seru

Stanford University

Francesco Trebbi

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: November 14, 2013

Abstract

This paper traces career transitions of federal and state U.S. banking regulators from a large sample of publicly available curricula vitae, and provides basic facts on worker flows between the regulatory and private sector resulting from the revolving door. We find strong countercyclical net worker flows into regulatory jobs, driven largely by higher gross outflows into the private sector during booms. These worker flows are also driven by state-specific banking conditions as measured by local banks’ profitability, asset quality and failure rates. The regulatory sector seems to experience a retention challenge over time, with shorter regulatory spells for workers, and especially those with higher education. Evidence from cross-state enforcement actions of regulators shows gross inflows into regulation and gross outflows from regulation are both higher during periods of intense enforcement, though gross outflows are significantly smaller in magnitude. These results appear inconsistent with a "quid-pro-quo" explanation of the revolving door, but consistent with a "regulatory schooling" hypothesis.

Keywords: Banking Regulation, Revolving Door, Inter-industry Worker Flows

JEL Classification: G21, G28

Suggested Citation

Lucca, David O. and Seru, Amit and Trebbi, Francesco, The Revolving Door and Worker Flows in Banking Regulation (November 14, 2013). Available at SSRN: https://ssrn.com/abstract=2449922 or http://dx.doi.org/10.2139/ssrn.2449922

David O. Lucca

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

Amit Seru (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Francesco Trebbi

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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