The revolving door and worker flows in banking regulation

David Lucca, Amit Seru and Francesco Trebbi

No 678, Staff Reports from Federal Reserve Bank of New York

Abstract: Drawing on a large sample of publicly available curricula vitae, this paper traces the career transitions of federal and state U.S. banking regulators and provides basic facts on worker flows between the regulatory and private sectors resulting from the revolving door. We find strong countercyclical net worker flows into regulatory jobs, driven largely by higher gross outflows into the private sector during booms. These worker flows are also driven by state-specific banking conditions as measured by local banks? profitability, asset quality, and failure rates. The regulatory sector seems to experience a retention challenge over time, with shorter regulatory spells for workers, and especially those with higher education. Evidence from cross-state enforcement actions of regulators shows that gross inflows into regulation and gross outflows from regulation are both higher during periods of intense enforcement, though gross outflows are significantly smaller in magnitude. These results appear inconsistent with a ?quid pro quo? explanation of the revolving door but consistent with a ?regulatory schooling? hypothesis.

Keywords: revolving doors; inter-industry worker flows; banking regulations (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-06-01
New Economics Papers: this item is included in nep-ban, nep-cba and nep-reg
Note: For a published version of this report, see David Lucca, Amit Seru, and Francesco Trebbi, "The Revolving Door and Worker Flows in Banking Regulation," Journal of Monetary Economics 65 (July 2014): 17-32.
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Citations: View citations in EconPapers (56)

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Journal Article: The revolving door and worker flows in banking regulation (2014)
Working Paper: The Revolving Door and Worker Flows in Banking Regulation (2014)
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