Regulation & Finance Sector Pay

Nice couple of charts that show correlation between what occurred when financial markets were deregulated and the outsized compensation packages that subsequently followed.

The book does a nice job showing how one led to the other — that there was both Correlation and Causation.

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fin-wages-vs-dereg

chart via NYU

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Here is a similar chart, with major regulation/deregulation included (I seemed to have lost the WSJ link — if anyone has it handy, please let me know!):

ratio-of-financial-service-wages-to-nonfarm-private-sector-wages
via WSJ

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Source:
Wages and Human Capital in the U.S. Financial Industry: 1909-2006∗
Thomas Philippon, New York University
Ariell Reshef, University of Virginia
December 2008
http://pages.stern.nyu.edu/~tphilipp/papers/pr_rev15.pdf

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