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Working paper 738

Ata Can Bertay, Jose Gabo Carreno, Harry Huizinga, Burak Uras, Nathanael Vellekoop, "Technological Change and the Finance Wage Premium", 2022-10-01
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Abstract: This paper utilizes a comprehensive worker-firm panel for the Netherlands to quantify the impact of ICT capital-skill complementarity on the finance wage premium after the Global Financial Crisis. We apply additive worker and firm fixed-effect models to account for unobserved worker- and firm-heterogeneity and show that firm fixed-effects correct for a downward bias in the estimated finance wage premium. Our results indicate a sizable finance wage premium for both fixed- and full-hourly wages. The complementarity between ICT capital spending and the share of high skill workers at the firm-level reduces the full-wage premium considerably and the fixed-wage premium almost entirely.

Keywords: finance wage premium, worker-firm panels, skill-biased technological change

JEL Classification: G20; J24; J31; O33