Wages and human capital in the U.S. financial industry: 1909–2006, NBER Working Paper No

We use detailed information about wages, education and occupations to shed light on the evolution of the U.S. Þnancial sector over the past century. We uncover a set of new, interrelated stylized facts: Þnancial jobs were relatively skill intensive, complex, and highly paid until the 1930s and after the 1980s, but not in the interim period. We investigate the determinants of this evolution and Þnd that Þnancial deregulation and corporate activities linked to IPOs and credit risk increase the demand for skills in Þnancial jobs. Computers and information technology play a more limited role. Our analysis also shows that wages in Þnance were excessively high around 1930 and from the mid 1990s until 2006. For the recent period we estimate that rents accounted for 30 % to 50 % of the wage di!erential between the Þnancial sector and the rest of the private sector