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Gender Gaps and Racial Disparities in Labour Market Penalties for Financial Misconduct

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  • Jun Honda

Abstract

We consider the labour market for financial advisers in the US using a matched employer-employee data set over the period 2008-2018, in order to examine gender gaps and racial disparities in labour market penalties for financial misconduct. We first show that the measurement of labour market penalties for financial misconduct plays a central role and the interdependence across misconduct-categories (e.g. customer disputes, regulatory actions, terminations) is gender- and racespecific. Accounting for this, we find that there are little gender gaps in job separation following misconduct and in the incidence of employer-initiated terminations conditional on misconduct-related events. In contrast, we find that racial minorities are at least 20% more likely to leave a firm following customer disputes or regulatory actions compared to their majority counterparts, and also that the racial minorities are 25% more likely to receive terminations. This remains true even after controlling for their education.

Suggested Citation

  • Jun Honda, 2020. "Gender Gaps and Racial Disparities in Labour Market Penalties for Financial Misconduct," Working Papers 2020-17, Faculty of Economics and Statistics, Universität Innsbruck.
    • Handle: RePEc:inn:wpaper:2020-17
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    More about this item

    Keywords

    Financial Advisers; Misconduct; Gender Gap; Racial Inequality; Discrimination;
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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