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Returns to Talent and the Finance Wage Premium

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  • Claire Célérier
  • Boris Vallée

Abstract

To study the role of talent in finance workers’ pay, we exploit a special feature of the French higher education system. Wage returns to talent have been significantly higher and have risen faster since the 1980s in finance than in other sectors. Both wage returns to project size and the elasticity of project size to talent are also higher in this industry. Last, the share of performance pay varies more for talent in finance. These findings are supportive of finance wages reflecting the competitive assignment of talent in an industry that exhibits a high complementarity between talent and scale.Received October 11, 2017; editorial decision September 4, 2018 by Editor Stijn Van Nieuwerburgh. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Suggested Citation

  • Claire Célérier & Boris Vallée, 2019. "Returns to Talent and the Finance Wage Premium," The Review of Financial Studies, Society for Financial Studies, vol. 32(10), pages 4005-4040.
    • Handle: RePEc:oup:rfinst:v:32:y:2019:i:10:p:4005-4040.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhz012
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    Citations

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    Cited by:

    1. Marin, Giovanni & Vona, Francesco, 2023. "Finance and the reallocation of scientific, engineering and mathematical talent," Research Policy, Elsevier, vol. 52(5).
    2. Bertay, Ata Can & Carreño, José & Huizinga, Harry & Uras, Burak & Vellekoop, Nathanael, 2022. "Technological change and the finance wage premium," SAFE Working Paper Series 361, Leibniz Institute for Financial Research SAFE.
    3. Andrew Ellul & Marco Pagano & Annalisa Scognamiglio, 2020. "Careers in Finance," EIEF Working Papers Series 2007, Einaudi Institute for Economics and Finance (EIEF), revised Dec 2021.
    4. Rachel Scarfe & Carl Singleton & Paul Telemo, 2021. "Extreme Wages, Performance, and Superstars in a Market for Footballers," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 84-118, January.
    5. Giovanni Marin & Francesco Vona, 2017. "Finance and the Misallocation of Scientific, Engineering and Mathematical Talent," SciencePo Working papers Main hal-03455397, HAL.
    6. repec:hal:spmain:info:hdl:2441/510i09nqpa8gfpt7na72sknq4q is not listed on IDEAS
    7. Taskin, Ahmet Ali & Yaman, Firat, 2023. "The effect of branching deregulation on finance wage premium," FAU Discussion Papers in Economics 08/2023, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    8. Anderson, Ronald W. & Jõeveer, Karin, 2022. "Bankers' pay and the evolving structure of US banking," LSE Research Online Documents on Economics 118862, London School of Economics and Political Science, LSE Library.
    9. Altunina Anastasiia, 2022. "Study-Work Trade-off in Contests With Capacity-Constrained Students," HSE Working papers WP BRP 259/EC/2022, National Research University Higher School of Economics.

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