Technological Change and the Finance Wage Premium

CentER Discussion Paper Nr. 2022-002

51 Pages Posted: 23 Mar 2022 Last revised: 23 Oct 2022

See all articles by Ata Can Bertay

Ata Can Bertay

Sabancı University; Tilburg University - European Banking Center

Jose Carreño

Tilburg University - Center for Economic Research (CentER), Students

Harry Huizinga

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR)

Burak Uras

Tilburg University - Center for Economic Research (CentER); Tilburg University - Department of Economics

Nate Vellekoop

Williams College - Department of Economics; University of Toronto

Multiple version iconThere are 2 versions of this paper

Date Written: January 25, 2022

Abstract

This paper utilizes a comprehensive worker-firm panel for the Netherlands to quantify the impact of ICT capital-skill complementarity on the finance wage premium after the Global Financial Crisis. We apply additive worker and firm fixed-effect models to account for unobserved worker- and firm-heterogeneity and show that firm fixed-effects correct for a downward bias in the estimated finance wage premium. Our results indicate a sizable finance wage premium for both fixed- and full-hourly
wages. The complementarity between ICT capital spending and the share of high skill workers at the firm-level reduces the full-wage premium considerably and the fixed-wage premium almost entirely.

Keywords: finance wage premium, worker-firm panels, skill-biased technological change

JEL Classification: G20, J24, J31, O33

Suggested Citation

Bertay, Ata Can and Carreño, Jose and Huizinga, Harry and Uras, Burak R. and Vellekoop, Nathanael, Technological Change and the Finance Wage Premium (January 25, 2022). CentER Discussion Paper Nr. 2022-002, Available at SSRN: https://ssrn.com/abstract=4016513 or http://dx.doi.org/10.2139/ssrn.4016513

Ata Can Bertay

Sabancı University ( email )

Orhanli
Istanbul, Tuzla 34956
Turkey

HOME PAGE: http://www.atabertay.com

Tilburg University - European Banking Center ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

Jose Carreño (Contact Author)

Tilburg University - Center for Economic Research (CentER), Students ( email )

Tilburg
Netherlands

Harry Huizinga

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2623 (Phone)
+31 13 466 3042 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Burak R. Uras

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Nathanael Vellekoop

Williams College - Department of Economics ( email )

Schapiro Hall
24 Hopkins Drive
Williamstown, MA 01267
United States

University of Toronto ( email )

Max Gluskin House
150 St George st
Toronto, Ontario M5S 3G7
Canada

HOME PAGE: http://www.nvellekoop.nl

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