Over the past 60 years, the U.S. financial sector has grown from 2.3% to 7.7% of GDP. While the growth in the share of value added has been fairly linear, it hides a dramatic change in the composition of skills and occupations. In the early 1980s, the financial sector started paying higher wages and hiring more skilled individuals than the rest of economy. These trends reflect a shift away from low-skill jobs and towards market-oriented activities within the sector. Our evidence suggests that technological and financial innovations both played a role in this transformation. We also document an increase in relative wages, controlling for education, which partly reflects an increase in unemployment risk: Finance jobs used to be safer than other jobs in the private sector, but this is not longer the case.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
13437.
Length: Date of creation: Sep 2007 Date of revision: Handle: RePEc:nbr:nberwo:13437
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Find related papers by JEL classification: G2 - Financial Economics - - Financial Institutions and Services J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
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