Finance and the Misallocation of Scientific, Engineering and Mathematical Talent
Résumé
The US financial sector has become a magnet for the brightest graduates in the science, technology, engineering
and mathematical fields (STEM). We provide quantitative bases for this well-known fact and illustrate its
consequences for the productivity growth in other sectors over the period 1980-2014. First, we find that the share
of STEM talents grew significantly faster in finance than in other key STEM sectors such as high-tech, and this
divergent pattern has been more evident for STEM than for general skills and more pronounced for investment
banking. Second, this trend did not reverse after the Great Recession, and a persistent wage premium is found for
STEM graduates working in finance and especially in typical financial jobs at the top of the wage distribution. Third,
the brain drain of STEM talents into finance has been associated with a cumulative loss of labor productivity growth
of 6.6% in the manufacturing sectors. Our results suggest that increasing the number of STEM graduates may not
be enough to reignite sluggish economic growth without making their employment in finance more costly.
Domaines
Economies et finances
Origine : Fichiers produits par l'(les) auteur(s)