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

58 Pages Posted: 14 Oct 2020

See all articles by Christos Makridis

Christos Makridis

Stanford University; Columbia University - Columbia Business School; Arizona State University (ASU); Department of Veterans Affairs (VA)

Alberto G. Rossi

Georgetown University

Date Written: September 2020


We document three recent trends in employment in financial services: (a) the share of science, technology, engineering, and math (STEM) workers grew by 30 percent 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 financial services have grown faster than in other sectors. We investigate three economic mechanisms underlying these patterns: (a) capital-skill complementarity, (b) relabeling of non-STEM degree programs as STEM degree programs, and (c) regulation. We show that only the rise in regulation can explain our observations.

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 (September 2020). Mercatus Working Paper Series, Available at SSRN: https://ssrn.com/abstract=3711513 or http://dx.doi.org/10.2139/ssrn.3711513

Christos Makridis (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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

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