“The Finance Wage Premium: The Dutch Case”
by Ata Can Bertay
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Meeting ID: 337 069 8252
We use a massive matched employer-employee database to identify the financial wage premium in the Netherlands. Using this data, we start by documenting the evolution of the finance industry over the period 2006-2018. Perhaps surprisingly, we show that the excessive wage in the finance industry steadily increased over the sample period despite the Global Financial Crisis and the European Debt Crisis. Consistent with the substitution of capital for unskilled labor to exploit technical change, we also observe that the supply of high-skilled workers and the capital associated with information and computer technologies (ICT) increased rapidly over the period 2006-2018. Guided by these facts, we study if the finance wage premium is explained by ICT capital-skill complementary at industry level when controlling by the observed and unobserved worker and firm characteristics. Contrary to a long literature documenting an excessive and unexplained wage premium in the finance industry, we find that the finance wage premium is -3%.