Financialization, the great recession, and the stratification of the US labor market

This contribution explores the possibility that the financialization of the US economy has created identity preference effects by linking managerial and financial occupations to high earnings, and in turn high earnings to the social status of the dominant demographic group in the labor force, namely white men. The empirical results for the 1983-2009 period confirm that a wage premium exists for individuals working in managerial and financial occupations, and that this finance wage premium is not equally distributed among all gender and ethnic groups. For each ethnic group, men have taken an increasing share of the finance wage premium at the expense of women. More specifically, white - and, to a lesser degree, Hispanic - men have enjoyed a disproportionate share of the finance wage premium. Financialization has thus been neither race nor gender neutral, and is at least in part responsible for the stratification effects of the Great Recession.