Finance, Talent Allocation, and Growth

61 Pages Posted: 29 Jan 2018 Last revised: 26 Sep 2018

See all articles by Francesco D'Acunto

Francesco D'Acunto

Boston College

Laurent Frésard

Universita della Svizzera italiana (USI Lugano); Swiss Finance Institute

Multiple version iconThere are 2 versions of this paper

Date Written: September 19, 2018


The growing finance wage premium relates to a modest net reallocation of skilled workers from non-finance sectors into finance in a sample of 13 sectors in 24 countries over 35 years. Reallocation is higher when the finance wage premium grows faster than the contribution of finance to the economy, whose variation we capture with the finance value added premium. Yet, the growing finance wage premium appears unrelated to sectoral or aggregate growth, innovation, student enrollment in STEM degrees, or the banks' riskiness. The reallocation of skilled labor the finance wage premium implies does not seem to materially affect economic growth.

Keywords: Finance Wage Premium, Skilled Labor, Misallocation, Growth, Innovation, STEM Education, Patents, Banking Sector, Value Added, Social Value of Finance

JEL Classification: D72, G20, J23, J31, N20

Suggested Citation

D'Acunto, Francesco and Frésard, Laurent, Finance, Talent Allocation, and Growth (September 19, 2018). Available at SSRN: or

Francesco D'Acunto

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Laurent Frésard (Contact Author)

Universita della Svizzera italiana (USI Lugano) ( email )

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

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