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Size and evolution of the financial wage premium. Unpublished translation of “Ampleur et évolution dela prime salariale financière”, Regards croisés sur l'économie, 2020, 27(2): 97-109

Author

Listed:
  • Olivier Godechot

    (Sciences Po - Sciences Po)

  • Paula Apascaritei
  • István Boza
  • Martin Hallsten
  • Lasse Henriksen
  • Are Hermansen
  • Feng Hou
  • Jiwook Jung
  • Alena Křížková
  • Zoltán Lippényi
  • Elvira Marta
  • Silvia Maja Melzer
  • Eunmi Mun
  • Halil Sabanci
  • Naomi Kodama
  • Max Thaning

Abstract

We measure the size and evolution of the wage premium for a job in finance. In thirteen developed countries, wages, especially high wages, increased at a sustained pace in this sector during the 1990s and 2000s, contributing strongly to the increase in the share of the national top 1% and hence to inequality. The explanation of this gap by differences in talent is not enough. In France, salaries remain 25 to 30% higher once the effect of the diploma is deducted. We offer an alternative explanation based on the ability of employees to move financial activity with them from one firm to another.

Suggested Citation

  • Olivier Godechot & Paula Apascaritei & István Boza & Martin Hallsten & Lasse Henriksen & Are Hermansen & Feng Hou & Jiwook Jung & Alena Křížková & Zoltán Lippényi & Elvira Marta & Silvia Maja Melzer &, 2021. "Size and evolution of the financial wage premium. Unpublished translation of “Ampleur et évolution dela prime salariale financière”, Regards croisés sur l'économie, 2020, 27(2): 97-109," Working Papers hal-03363171, HAL.
    • Handle: RePEc:hal:wpaper:hal-03363171
    Note: View the original document on HAL open archive server: https://hal.science/hal-03363171
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    References listed on IDEAS

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    1. Brian Bell & John Reenen, 2014. "Bankers and Their Bonuses," Economic Journal, Royal Economic Society, vol. 124(574), pages 1-21, February.
    2. Godechot, Olivier, 2015. "Financialization is marketization! A study on the respective impact of various dimensions of financialization on the increase in global inequality," MaxPo Discussion Paper Series 15/3, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
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    4. Paul Oyer, 2008. "The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Income," Journal of Finance, American Finance Association, vol. 63(6), pages 2601-2628, December.
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    6. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
    7. Olivier Godechot, 2017. "Wages, Bonuses and Appropriation of Profit in the Financial Industry. The Working Rich," Post-Print hal-01433807, HAL.
    8. Thomas Philippon & Ariell Reshef, 2012. "Wages and Human Capital in the U.S. Finance Industry: 1909--2006," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(4), pages 1551-1609.
    9. Basak Kus, 2012. "Financialisation and Income Inequality in OECD Nations:1995-2007," The Economic and Social Review, Economic and Social Studies, vol. 43(4), pages 477-495.
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