Product Markets and Paychecks: Deregulation's Effect on the Compensation Structure in Banking

Abigail Wozniak

No 1957, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper asks how deregulation intended to promote competition in the commercial banking industry affected the compensation structure for banking employees. Using establishment-based data from the Employment Cost Index Survey of the U.S. Bureau of Labor Statistics, I obtain measures of the level and distribution of wage and benefits compensation within industries. I then compare changes in compensation in the banking industry to changes in unaffected industries across states and over time to identify the effects of deregulation. Banking deregulation had no effect on compensation levels or inequality in the industry as a whole, but this masks conflicting changes within the compensation structure. Manager wages fell while non-manager wages held steady, leading to a large decline in between-occupation compensation inequality. In contrast, between-establishment inequality increased dramatically. Deregulation also led to increases in inequality among managers despite their falling wages and to significant shifts in the types of non-wage benefits banking employees received.

Keywords: commercial banking; product market competition; compensation inequality; total compensation (search for similar items in EconPapers)
JEL-codes: J31 L11 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2006-01
New Economics Papers: this item is included in nep-com, nep-lab and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Industrial and Labor Relations Review, 2007, 60 (2), 246-267

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Journal Article: Product Markets and Paychecks: Deregulation's Effect on the Compensation Structure in Banking (2007)
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