IDEAS home Printed from
   My bibliography  Save this paper

Wage Growth and Human Capital in the UK Finance Sector


  • Joanne Lindley

    (University of Surrey)


Despite the recent financial crisis the UK financial pay premium has continued to rise. To some extent this is a consequence of increased skill intensity in the finance sector, but this paper shows that finance workers have higher cognitive skills, on average, and this partly explains their higher wages. These are significant across all post-secondary education groups and not just those at the top. However, after controlling for unobserved heterogeneity we still find unexplainable rents to finance sector workers which are largely a consequence of bonuses. Though we also show that finance workers are more likely to be insecure about their job especially those that receive higher bonuses. In keeping with the existing literature on inequality we estimate demand and supply models to explain increasing inequality between finance workers vis-à-vis other workers. We find that finance workers are not perfect substitutes for non-finance workers in production, which is consistent with them having higher cognitive skills. Finally, we find relative demand shifts in favour of finance sector workers which are partially correlated with increased financial innovation and technical change, but most importantly we find that these demand shifts are slowing down.

Suggested Citation

  • Joanne Lindley, 2013. "Wage Growth and Human Capital in the UK Finance Sector," School of Economics Discussion Papers 0313, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:0313

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sur:surrec:0313. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ioannis Lazopoulos (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.