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Title: "Since You're So Rich, You Must Be Really Smart": Talent and the Finance Wage Premium

Citation Type: Working Paper

Publication Year: 2018

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Abstract: Financial sector wages increased extraordinarily over the last decades. An explanation for this trend is that skill demand rose more in finance than other sectors. We use Swedish administrative data, which include cognitive and non-cognitive ability, as well as U.S. data, to examine talent allocation and relative wages in the financial sector. We find no evidence that talent in finance improved, neither on average nor at the top. A changing composition or return to talent cannot account for the surging wage premium. Our findings alleviate concerns about a brain drain, but indicate that finance workers capture rising rents over time.

Url: https://ssrn.com/abstract=2780367http://ssrn.com/abstract_id=2780367www.ecgi.org/wp

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Authors: Böhm, Michael; Metzger, Daniel; Strömberg, Per

Series Title: ECGI Working Paper Series in Finance

Publication Number: 553/2018

Institution: ECGI

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Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

Countries: United States