Technological Change and the Finance Wage Premium
52 Pages Posted: 31 Oct 2022
Date Written: October 01, 2022
This paper utilizes a comprehensive worker-firm panel for the Netherlands to quantifythe 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: Suggested Citation