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Employer Dominance and Worker Earnings in Finance

Author

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  • Wenting Ma

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.

Suggested Citation

  • Wenting Ma, 2024. "Employer Dominance and Worker Earnings in Finance," Working Papers 24-41, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:24-41
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    File URL: https://www2.census.gov/library/working-papers/2024/adrm/ces/CES-WP-24-41.pdf
    File Function: First version, 2024
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    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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