The Revolving Door and Worker Flows in Banking Regulation

David Lucca, Amit Seru and Francesco Trebbi

No 20241, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper traces career transitions of federal and state U.S. banking regulators from a large sample of publicly available curricula vitae, and provides basic facts on worker flows between the regulatory and private sector 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 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.

JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2014-06
New Economics Papers: this item is included in nep-ban and nep-reg
Note: CF POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

Published as Lucca, David & Seru, Amit & Trebbi, Francesco, 2014. "The revolving door and worker flows in banking regulation," Journal of Monetary Economics, Elsevier, vol. 65(C), pages 17-32.

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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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