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Bank deregulation and relative wages in finance

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Abstract

Rising wages in the finance industry have been a source of debate and are usually linked to financial deregulations. Exploiting the cross-state and over-time variation in the timing of US bank deregulations, this article investigates the causal impact of each type of deregulation on the relative wages in the finance industry. I document that relative wages in finance began to rise in the early 1980s in almost all states, including those that deregulated before 1970 and those that deregulated in the 1990s. Consistently, after controlling for aggregate macro shocks that affected all states, there is no evidence that relative finance wages increased more following any type of deregulation. If anything, I find a negative impact of bank branching deregulation on relative wages in finance. These results together with those found in the study by Philippon and Reshef (2012) call for a better understanding of the dynamics of wages in the finance industry.

Suggested Citation

  • Hamid, 2014. "Bank deregulation and relative wages in finance," Applied Economics Letters, Taylor & Francis Journals, vol. 21(2), pages 69-74, January.
    • Handle: RePEc:taf:apeclt:v:21:y:2014:i:2:p:69-74
    DOI: 10.1080/13504851.2013.829180
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    1. 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.
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    Cited by:

    1. Karwowski, Mariusz, 2016. "The risk in using financial reports in the study of airline business models," Journal of Air Transport Management, Elsevier, vol. 55(C), pages 185-192.
    2. Nicola Cetorelli & Linda S. Goldberg, 2016. "Organizational Complexity and Balance Sheet Management in Global Banks," NBER Working Papers 22169, National Bureau of Economic Research, Inc.
    3. Thomas Philippon & Pierre Pessarossi & Boubacar Camara, 2017. "Backtesting European Stress Tests," NBER Working Papers 23083, National Bureau of Economic Research, Inc.
    4. Anne Mills, 2015. "Universal Health Coverage: The Holy Grail?," Monograph 001571, Office of Health Economics.
    5. Alexander Ludwig & Alexander Monge-Naranjo & Ctirad Slavik & Faisal Sohail, 2019. "Financial Liberalization and Income Inequality: On the Heterogenous Effects of Different Reforms," 2019 Meeting Papers 895, Society for Economic Dynamics.
    6. Boustanifar, Hamid, 2014. "Finance and employment: Evidence from U.S. banking reforms," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 343-354.

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