Employer Dominance and Worker Earnings in Finance
August 2024
Working Paper Number:
CES-24-41
Abstract
Large firms in the U.S. financial system achieve substantial economic gains. Their dominance sets them apart while also raising concerns about the suppression of worker earnings. Utilizing administrative data, this study reveals that the largest financial firms pay workers an average of 30.2% more than their smallest counterparts, significantly exceeding the 7.9% disparity in nonfinance sectors. This positive size-earnings relationship is consistently more pronounced in finance, even during the 2008 crisis or compared to the hightech sector. Evidence suggests that large financial firms' excessive gains, coupled with their workers' sought-after skills, explain this distinct relationship.
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:
investment,
economist,
earnings,
corporation,
employee,
corporate,
financial,
finance,
leverage,
firms size,
larger firms,
lender,
economically,
profit,
revenue,
salary,
earn,
earner,
banking,
earnings age
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Standard Industrial Classification,
Bureau of Labor Statistics,
Longitudinal Business Database,
Council of Economic Advisers,
American Community Survey,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
Employment History File,
Individual Characteristics File,
Business Register Bridge,
Census Bureau Disclosure Review Board,
Herfindahl-Hirschman,
Federal Statistical Research Data Center
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