IDEAS home Printed from https://ideas.repec.org/p/zbw/cfswop/674.html
   My bibliography  Save this paper

Careers in finance

Author

Listed:
  • Ellul, Andrew
  • Pagano, Marco
  • Scognamiglio, Annalisa

Abstract

The finance wage premium since the 1990s has arguably lured talent away from other industries. However, the allocation of talent is likely to respond to differences in career paths, not in wages at a given date. We use resume data to reconstruct the careers of 11,255 professionals in finance, high-tech and services from 1980 to 2017, and find that careers mostly develop within sectors. Careers in asset management feature higher and steeper pay profiles than those of employees in banking, insurance and non-finance, yet this career premium cannot be explained by higher risk. Labor market entry responds positively to career premia in asset management and high-tech, and these sectors are regarded as substitutes by potential entrants, consistently with high-tech competing with asset management in attracting talent.

Suggested Citation

  • Ellul, Andrew & Pagano, Marco & Scognamiglio, Annalisa, 2021. "Careers in finance," CFS Working Paper Series 674, Center for Financial Studies (CFS).
    • Handle: RePEc:zbw:cfswop:674
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/248409/1/1782211640.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raj Chetty, 2006. "A New Method of Estimating Risk Aversion," American Economic Review, American Economic Association, vol. 96(5), pages 1821-1834, December.
    2. Roland Bénabou & Jean Tirole, 2016. "Bonus Culture: Competitive Pay, Screening, and Multitasking," Journal of Political Economy, University of Chicago Press, vol. 124(2), pages 305-370.
    3. Andrew Ellul & Marco Pagano & Annalisa Scognamiglio, 2020. "Career Risk and Market Discipline in Asset Management," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 783-828.
    4. Marianne Bertrand & Claudia Goldin & Lawrence F. Katz, 2010. "Dynamics of the Gender Gap for Young Professionals in the Financial and Corporate Sectors," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 228-255, July.
    5. Marianne Bertrand & Kevin F. Hallock, 2001. "The Gender Gap in Top Corporate Jobs," ILR Review, Cornell University, ILR School, vol. 55(1), pages 3-21, October.
    6. Claire Célérier & Boris Vallée, 2019. "Returns to Talent and the Finance Wage Premium," The Review of Financial Studies, Society for Financial Studies, vol. 32(10), pages 4005-4040.
    7. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    8. Graham, John R. & Harvey, Campbell R. & Puri, Manju, 2013. "Managerial attitudes and corporate actions," Journal of Financial Economics, Elsevier, vol. 109(1), pages 103-121.
    9. Hamid Boustanifar & Everett Grant & Ariell Reshef, 2018. "Wages and Human Capital in Finance: International Evidence, 1970–2011 [Financial reform: what shakes it? What shapes it?]," Review of Finance, European Finance Association, vol. 22(2), pages 699-745.
    10. Paul Oyer, 2008. "The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Income," Journal of Finance, American Finance Association, vol. 63(6), pages 2601-2628, December.
    11. Brian D. Bell & John Van Reenen, 2013. "Extreme Wage Inequality: Pay at the Very Top," American Economic Review, American Economic Association, vol. 103(3), pages 153-157, May.
    12. Renée B. Adams & Tom Kirchmaier, 2016. "Women on Boards in Finance and STEM Industries," American Economic Review, American Economic Association, vol. 106(5), pages 277-281, May.
    13. 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.
    14. Antoinette Schoar & Luo Zuo, 2017. "Shaped by Booms and Busts: How the Economy Impacts CEO Careers and Management Styles," The Review of Financial Studies, Society for Financial Studies, vol. 30(5), pages 1425-1456.
    15. Steven N. Kaplan & Mark M. Klebanov & Morten Sorensen, 2012. "Which CEO Characteristics and Abilities Matter?," Journal of Finance, American Finance Association, vol. 67(3), pages 973-1007, June.
    16. Robin Greenwood & David Scharfstein, 2013. "The Growth of Finance," Journal of Economic Perspectives, American Economic Association, vol. 27(2), pages 3-28, Spring.
    17. Hamid Boustanifar & Everett Grant & Ariell Reshef, 2016. "Wages and human capital in finance: international evidence, 1970-2005," Globalization Institute Working Papers 266, Federal Reserve Bank of Dallas.
    18. Matthew Wiswall & Basit Zafar, 2021. "Human Capital Investments and Expectations about Career and Family," Journal of Political Economy, University of Chicago Press, vol. 129(5), pages 1361-1424.
    19. Casey B. Mulligan & Yona Rubinstein, 2008. "Selection, Investment, and Women's Relative Wages Over Time," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(3), pages 1061-1110.
    20. Ulrike Malmendier & Geoffrey Tate & Jon Yan, 2011. "Overconfidence and Early‐Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies," Journal of Finance, American Finance Association, vol. 66(5), pages 1687-1733, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Matthias Breuer & Christian Leuz & Steven Vanhaverbeke, 2019. "Reporting Regulation and Corporate Innovation," NBER Working Papers 26291, National Bureau of Economic Research, Inc.
    2. Andrej Gill & Matthias Heinz & Heiner Schumacher & Matthias Sutter, 2020. "Trustworthiness in the Financial Industry," CESifo Working Paper Series 8501, CESifo.
    3. Andrej Gill & Matthias Heinz & einer Schumacher & Matthias Sutter, 2020. "Trustworthiness in the Financial Industry," Working Papers 2020-28, Faculty of Economics and Statistics, Universität Innsbruck.
    4. Gill, Andrej & Heinz, Matthias & Schumacher, Heiner & Sutter, Matthias, 2020. "Trustworthiness in the Financial Industry," IZA Discussion Papers 13583, Institute of Labor Economics (IZA).
    5. Andrej Gill & Matthias Heinz & Heiner Schumacher & Matthias Sutter, 2023. "Social Preferences of Young Professionals and the Financial Industry," Management Science, INFORMS, vol. 69(7), pages 3905-3919, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrew Ellul & Marco Pagano & Annalisa Scognamiglio, 2020. "Career Risk and Market Discipline in Asset Management," The Review of Financial Studies, Society for Financial Studies, vol. 33(2), pages 783-828.
    2. repec:zbw:bofitp:2020_015 is not listed on IDEAS
    3. Marin, Giovanni & Vona, Francesco, 2023. "Finance and the reallocation of scientific, engineering and mathematical talent," Research Policy, Elsevier, vol. 52(5).
    4. Hong Ru & Endong Yang & Kunru Zou, 2021. "Combating the COVID-19 Pandemic: The Role of the SARS Imprint," Management Science, INFORMS, vol. 67(9), pages 5606-5615, September.
    5. Böhm, Michael & Metzger, Daniel & Strömberg, Per, 2015. "Since you’re so rich, you must be really smart”: Talent and the Finance Wage Premium," Working Paper Series 313, Sveriges Riksbank (Central Bank of Sweden).
    6. Ru, Hong & Yang, Endong & Zou, Kunru, 2020. "Combating the COVID-19 pandemic : The role of the SARS imprint," BOFIT Discussion Papers 15/2020, Bank of Finland, Institute for Economies in Transition.
    7. Camelia M. Kuhnen & Paul Oyer, 2016. "Exploration for Human Capital: Evidence from the MBA Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 255-286.
    8. Matthias Efing & Harald Hau & Patrick Kampkötter & Jean-Charles Rochet & Itay Goldstein, 2023. "Bank Bonus Pay as a Risk Sharing Contract," The Review of Financial Studies, Society for Financial Studies, vol. 36(1), pages 235-280.
    9. Enkhtaivan, Bolortuya & Davaadorj, Zagdbazar, 2021. "Do they recall their past? CEOs’ liquidity policies across firms as they switch jobs," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).
    10. Cook, Douglas O. & Chowdhury, Jaideep & Zhang, Weiwei, 2023. "Director optimism and CEO equity compensation," Journal of Empirical Finance, Elsevier, vol. 72(C), pages 143-162.
    11. Marius Guenzel & Ulrike Malmendier, 2020. "Behavioral Corporate Finance: The Life Cycle of a CEO Career," NBER Working Papers 27635, National Bureau of Economic Research, Inc.
    12. Malmendier, Ulrike M. & Guenzel, Marius, 2020. "Behavioral Corporate Finance: The Life Cycle of a CEO Career," CEPR Discussion Papers 15103, C.E.P.R. Discussion Papers.
    13. Bushman, Robert M. & Davidson, Robert H. & Dey, Aiyesha & Smith, Abbie, 2018. "Bank CEO materialism: Risk controls, culture and tail risk," Journal of Accounting and Economics, Elsevier, vol. 65(1), pages 191-220.
    14. Godechot, Olivier, 2015. "Financialization is marketization! A study on the respective impact of various dimensions of financialization on the increase in global inequality," MaxPo Discussion Paper Series 15/3, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
    15. Arnold, Lutz G. & Zelzner, Sebastian, 2022. "Financial trading versus entrepreneurship: Competition for talent and negative feedback effects," The Quarterly Review of Economics and Finance, Elsevier, vol. 86(C), pages 186-199.
    16. Alexandra Niessen-Ruenzi & Stefan Ruenzi, 2019. "Sex Matters: Gender Bias in the Mutual Fund Industry," Management Science, INFORMS, vol. 65(7), pages 3001-3025, July.
    17. Matti Keloharju & Samuli Knüpfer & Joacim Tåg, 2022. "What prevents women from reaching the top?," Financial Management, Financial Management Association International, vol. 51(3), pages 711-738, September.
    18. Chen, Jie & Lasfer, Meziane & Song, Wei & Zhou, Si, 2021. "Recession managers and mutual fund performance," Journal of Corporate Finance, Elsevier, vol. 69(C).
    19. Adams, Renée & Keloharju, Matti & Knüpfer, Samuli, 2018. "Are CEOs born leaders? Lessons from traits of a million individuals," Journal of Financial Economics, Elsevier, vol. 130(2), pages 392-408.
    20. Francesco D'Acunto & Laurent Frésard, 2018. "Finance, Talent Allocation, and Growth," CESifo Working Paper Series 6883, CESifo.
    21. repec:hal:spmain:info:hdl:2441/53fhlrk21m95fr2o3ajosmu5jg is not listed on IDEAS
    22. Strömberg, Per & Metzger, Daniel & Böhm, Michael, 2018. "“Since you’re so rich, you must be really smart†: Talent and the Finance Wage Premium," CEPR Discussion Papers 12711, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    careers; finance premium; asset management; labor market entry; high-tech;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    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:zbw:cfswop:674. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ifkcfde.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.