Rise of the 'Quants' in Financial Services: Regulation and Crowding Out of Routine Jobs
33 Pages Posted: 8 Aug 2018 Last revised: 19 Nov 2018
Date Written: July 22, 2018
This paper documents a rise in high-technology workers in the financial services sector and finds evidence that financial regulation has contributed to this change in labor force composition. First, we show that the share of science, technology, engineering, and math (STEM) workers in finance has grown from 6.7% to 9.4% over the past decade, moderated by a 4.9% decline in their earnings premium. Moreover, the overall increase in STEM workers is heavily concentrated in metropolitan areas that have a higher finance employment share. Second, we estimate how financial regulation has affected the composition of jobs in financial services. Using data from QuantGov as well as a difference-in-difference estimator motivated by differential exposure to post-crisis regulatory reforms, we show that regulation increases the share of STEM workers and crowds out employment in more routine occupations.
Keywords: Fintech, Financial Services, High Tech Workers, Regulation, STEM
JEL Classification: G21, G23, G38, J23, J31
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