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The Division of Spoils: Rent-Sharing and Discrimination in a Regulated Industry

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Author Info
Sandra E. Black
Philip E. Strahan

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Abstract

Until the middle of the 1970s, regulations constrained banks' ability to enter new markets. Over the subsequent 25 years, states gradually lifted these restrictions. This paper tests whether rents fostered by regulation were shared with labor, and whether firms were discriminating by sharing these rents disproportionately with male workers. We find that average compensation and average wages for banking employees fell after states deregulated. Male wages fell by about 12 percent after deregulation, whereas women's wages fell by only 3 percent, suggesting that rents were shared mainly with men. Women's share of employment in managerial positions also increased following deregulation.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 91 (2001)
Issue (Month): 4 (September)
Pages: 814-831
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Handle: RePEc:aea:aecrev:v:91:y:2001:i:4:p:814-831

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Akerlof, George A, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, MIT Press, vol. 97(4), pages 543-69, November. [Downloadable!] (restricted)
  2. Ernst FEHR & Simon GÄCHTER & Georg KIRCHSTEIGER, 1994. "Reciprocal Fairness and Noncompensating Wage Differentials," Vienna Economics Papers vie9401, University of Vienna, Department of Economics.
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  4. Ashenfelter, Orley & Hannan, Timothy, 1986. "Sex Discrimination and Product Market Competition: The Case of the Banking Industry," The Quarterly Journal of Economics, MIT Press, vol. 101(1), pages 149-73, February. [Downloadable!] (restricted)
  5. Peoples, James, 1998. "Deregulation and the Labor Market," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 111-30, Summer. [Downloadable!] (restricted)
  6. Marianne Bertrand & Sendhil Mullainathan, 1999. "Is There a Discretion in Wage Setting? A Test Using Takeover Legislation," RAND Journal of Economics, The RAND Corporation, vol. 30(3), pages 535-554, Autumn. [Downloadable!] (restricted)
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  7. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December. [Downloadable!] (restricted)
  8. Jayaratne, Jith & Strahan, Philip E, 1996. "The Finance-Growth Nexus: Evidence from Bank Branch Deregulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 639-70, August. [Downloadable!] (restricted)
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  13. Kroszner, Randall S & Strahan, Philip E, 1996. " Regulatory Incentives and the Thrift Crisis: Dividends, Mutual-to-Stock Conversions, and Financial Distress," Journal of Finance, American Finance Association, vol. 51(4), pages 1285-1319, September. [Downloadable!] (restricted)
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  15. Judith K. Hellerstein & David Neumark & Kenneth R. Troske, 1997. "Market Forces and Sex Discrimination," NBER Working Papers 6321, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Sandra E. Black & Elizabeth Brainerd, 1999. "Importing equality? The effects of increased competition on the gender wage gap," Staff Reports 74, Federal Reserve Bank of New York. [Downloadable!]
  17. Hubbard, R. Glenn & Palia, Darius, 1995. "Executive pay and performance Evidence from the U.S. banking industry," Journal of Financial Economics, Elsevier, vol. 39(1), pages 105-130, September. [Downloadable!] (restricted)
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  18. Kane, Edward J, 1996. "De Jure Interstate Banking: Why Only Now?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(2), pages 141-61, May. [Downloadable!] (restricted)
  19. Winston, Clifford, 1993. "Economic Deregulation: Days of Reckoning for Microeconomists," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1263-89, September. [Downloadable!] (restricted)
  20. Economides, Nicholas & Hubbard, R Glenn & Palia, Darius, 1996. "The Political Economy of Branching Restrictions and Deposit Insurance: A Model of Monopolistic Competition among Small and Large Banks," Journal of Law & Economics, University of Chicago Press, vol. 39(2), pages 667-704, October.
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  21. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law & Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
  22. Blanchflower, David G & Oswald, Andrew J & Sanfey, Peter, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 227-51, February. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Maria Guadalupe, 2005. "Product Market Competition Returns to Skill and Wage Inequality," CEP Discussion Papers dp0686, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  2. Abigail Wozniak, 2006. "Product Markets and Paychecks: Deregulation's Effect on the Compensation Structure in Banking," IZA Discussion Papers 1957, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Daiji Kawaguchi, 2004. "Male-Female Wage and Productivity Differentials: A Structural Approach Using Japanese Firm-Level Panel Data," Econometric Society 2004 Australasian Meetings 303, Econometric Society. [Downloadable!]
    Other versions:
  4. Pedro S. Martins, 2004. "Rent Sharing Before and After the Wage Bill," Discussion Paper Series, Department of Economics 0405, Department of Economics, University of St. Andrews. [Downloadable!]
    Other versions:
  5. Gürtzgen, Nicole, 2005. "Rent-Sharing and Collective Bargaining Coverage – Evidence from Linked Employer-Employee Data," ZEW Discussion Papers 05-90, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  6. Wasmer, Etienne & Weil, Philippe, 2002. "The Macroeconomics of Labour and Credit Market Imperfections," CEPR Discussion Papers 3334, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Natália Pimenta Monteiro, 2004. "The impact of Privatisation on Wages: Evidence from the Portuguese Banking Industry," NIPE Working Papers 11/2004, NIPE - Universidade do Minho. [Downloadable!]
    Other versions:
  8. Oostendorp, Remco, 2004. "Globalization and the gender wage gap," Policy Research Working Paper Series 3256, The World Bank. [Downloadable!]
  9. Gunseli Berik & Yana van der Meulen Rodgers & Joseph E. Zveglich Jr., 2003. "Does Trade Promote Gender Wage Equity?: Evidence from East Asia," Economics Working Paper Archive 373, Levy Economics Institute, The. [Downloadable!]
    Other versions:
  10. Natália Pimenta Monteiro, 2004. "Regulatory reform and the Portuguese banking labour market: two decades later," NIPE Working Papers 10/2004, NIPE - Universidade do Minho. [Downloadable!]
  11. Raghuram G. Rajan, 2005. "Has financial development made the world riskier?," Proceedings, Federal Reserve Bank of Kansas City, issue Aug, pages 313-369. [Downloadable!]
    Other versions:
  12. Rafael Lalive & Alois Stutzer, 2004. "Approval of Equal Rights and Gender Differences in Well-Being," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  13. Thorsten Beck & Ross Levine & Alexey Levkov, 2007. "Big Bad Banks? The Impact of U.S. Branch Deregulation on Income Distribution," NBER Working Papers 13299, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Juan J. Dolado & Florentino Felgueroso & Miguel Almunia, 2005. "Do Men and Women-Economists Choose the Same Research Fields? Evidence from Top-50 Departments," IZA Discussion Papers 1859, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  15. William Kerr & Ramana Nanda, 2006. "Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship," Working Papers 07-033, Harvard Business School, revised Dec 2007. [Downloadable!]
    Other versions:
  16. Black, Sandra & Brainerd, Elizabeth, 2002. "Importing Equality? The Impact of Globalization on Gender Discrimination," CEPR Discussion Papers 3532, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  17. Natália Pimenta Monteiro & Miguel Portela, 2007. "Rent-sharing in Portuguese Banking," NIPE Working Papers 18/2007, NIPE - Universidade do Minho. [Downloadable!]
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