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The Growth of Finance is Not Remarkable

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  • Brown, James R.
  • Martinsson, Gustav
  • Petersen, Bruce C.

Abstract

An important literature emphasizes that finance grew rapidly after WWII relative to the full economy and the services sector, but these are poor benchmarks because they mask a broad structural shift from low- to high-skill services. We show that i) finance is among the most skill-intensive service industries, ii) the evolution of the finance income share closely tracks other high-skill service industries, and iii) finance grew much slower than the rest of high-skill services in the post-WWII period. The rise of modern finance is not as remarkable as prior research suggests, providing context for debates about the size of finance.

Suggested Citation

  • Brown, James R. & Martinsson, Gustav & Petersen, Bruce C., 2023. "The Growth of Finance is Not Remarkable," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(6), pages 2553-2578, September.
    • Handle: RePEc:cup:jfinqa:v:58:y:2023:i:6:p:2553-2578_9
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