Abstract
Rising wages in the finance industry have been a source of debate and are usually linked to financial deregulations. Exploiting the cross-state and over-time variation in the timing of US bank deregulations, this article investigates the causal impact of each type of deregulation on the relative wages in the finance industry. I document that relative wages in finance began to rise in the early 1980s in almost all states, including those that deregulated before 1970 and those that deregulated in the 1990s. Consistently, after controlling for aggregate macro shocks that affected all states, there is no evidence that relative finance wages increased more following any type of deregulation. If anything, I find a negative impact of bank branching deregulation on relative wages in finance. These results together with those found in the study by Philippon and Reshef (2012) call for a better understanding of the dynamics of wages in the finance industry. © 2013 TaylorXX1Francis.