'Since You're so Rich, You Must Be Really Smart': Talent and the Finance Wage Premium

Böhm, Michael; Metzger, Daniel; Strömberg, Per

doi:10.2139/ssrn.2780367

Cited by 20 publications

(29 citation statements)

References 66 publications

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“…This resonates with Bohm, Metzger, and Stromberg (2015), who …nd that returns to ability in …nance have not increased over time, and therefore cannot explain the increase in …nance wages in Sweden. 19 Alternatively, certain types of …elds of study may be relatively more important in …nance, given ability.…”

Section: Finance Relative Wagesmentioning

confidence: 63%

“…Using data on French engineers in 1983, Célérier and Vallée (2015 estimate that the entire increase in …nance wages in their sample is explained by sector-speci…c increases in returns to talent in this sector. In contrast, Bohm, Metzger, and Stromberg (2015) …nd that the increase in relative wages in …nance in Sweden in 1991-2010 cannot be explained by changing returns to talent. Moreover, they show that average talent-measured by cognitive test scores and high-school grades-has not increased in …nance relative to other sectors.…”

Section: Introductionmentioning

confidence: 83%

“…Using Swedish data, Bohm, Metzger, and Stromberg (2015) show that relative skill (education) in …nance is a poor measure of relative ability-measured as cognitive and non-cognitive test scores at age 18. While relative education increases, relative ability-thus measured-does not follow a similar trend.…”

Section: Finance Relative Wagesmentioning

confidence: 99%

“…Juxtaposing …ndings in Philippon and Reshef (2012) with those in Philippon and Reshef (2013) we see that the growth of …nance and its internal organization are not the same phenomena, and follow di¤erent-although probably not independent-paths. 2 For patterns of changes in relative wages see Philippon and Reshef (2012) for the United States, Célérier and Vallée (2015) for France, Lindley and McIntosh (2014) for the United Kingdom, to which Wurgler (2009) adds Germany, Bohm, Metzger, and Stromberg (2015) for Sweden, and Philippon and Reshef (2013) for several other developed economies.…”

Section: Introductionmentioning

confidence: 99%

“…Lindley and McIntosh (2014) study a sample of 378 workers in …nance in the United Kingdom andsimilar to Bohm, Metzger, and Stromberg (2015)-do not detect an increase in talent (measured as numeracy). While job characteristics and technological change go some way in explaining the rise in …nance wages within their sample, a large residual is left unexplained.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

Wages and Human Capital in Finance: International Evidence, 1970-2005

Boustanifar¹,

Grant²,

Reshef³

2016

gwp

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We study the allocation and compensation of human capital in the finance industry in a set of developed economies in 1970-2005. Finance relative skill intensity and skilled wages generally increase but not in all countries, and to varying degrees. Skilled wages in finance account for 36% of increases in overall skill premia, although finance only accounts for 5.4% of skilled private sector employment, on average. Financial deregulation, financial globalization and bank concentration are the most important factors driving wages in finance. Differential investment in information and communication technology does not have causal explanatory power. High finance wages attract skilled international immigration to finance, raising concerns for "brain drain".

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Section: Finance Relative Wagesmentioning

confidence: 63%

Section: Introductionmentioning

confidence: 83%

Section: Finance Relative Wagesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Wages and Human Capital in Finance: International Evidence, 1970-2005

Boustanifar¹,

Grant²,

Reshef³

2016

gwp

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Firing the wrong workers: Financing constraints and labor misallocation

Caggese

Cuñat²,

Metzger

2019

Journal of Financial Economics

122

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Firms consider wages, current and expected productivity as well as firing and hiring costs when firing a worker. Financing constraints distort this intertemporal trade-off, leading firms to sub-optimally fire short-tenured workers with high future expected productivity. We provide empirical evidence of this distortion using matched employer-employee data from the Swedish population between 2000 and 2010. We propose a new empirical strategy that uses credit ratings to identify financing constraints and uses exchange rates and trade data to identify demand shocks. Our empirical results identify an important new misallocation effect of financial frictions that operates within firms across different types of workers.

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Finance and the reallocation of scientific, engineering and mathematical talent

Vona

2023

Research Policy

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'Since You're so Rich, You Must Be Really Smart': Talent and the Finance Wage Premium

Cited by 20 publications

References 66 publications

Wages and Human Capital in Finance: International Evidence, 1970-2005

Wages and Human Capital in Finance: International Evidence, 1970-2005

Firing the wrong workers: Financing constraints and labor misallocation

Finance and the reallocation of scientific, engineering and mathematical talent

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