Wages and Human Capital in the U.S. Financial Industry: 1909–2006

International audienceWe study the allocation and compensation of human capital in the U.S. finance industry over the past century. Across time, space, and subsectors, we find that financial deregulation is associated with skill intensity, job complexity, and high wages for finance employees. All three measures are high before 1935 and after 1980, but not in the interim period. Workers in the finance industry earn the same education-adjusted wages as other workers until 1990 and significantly more afterward. By 2006 the premium is 40% on average, and 200% for top earners and CEOs. Earnings risk and firm size effects account for some of the premium, but the majority does not appear to be sustainable