Working Paper: NBER ID: w28668
Authors: Wei Jiang; Yuehua Tang; Rachel Jiqiu Xiao; Vincent Yao
Abstract: This paper studies how demand for labor reacts to financial technology (fintech) shocks based on comprehensive databases of fintech patents and firm job postings in the U.S. during the past decade. We first develop a measure of fintech exposure at the occupation level by intersecting the textual information in job task descriptions and fintech patents. We then document a significant decline of job postings in the most exposed occupations, and an increase in industry as well as geographical concentration of these occupations. Firms resort to an upskilling strategy in face of the fintech disruption, requiring “combo” (finance and software) skills, higher education attainments, and longer work experiences in the hiring of fintech-exposed jobs. Financial firms and those with high innovation outputs are able to offset the disruptive effect from the fintech shock. Among innovating firms, however, only inventors (but not acquisition-driven innovators) experience growth in hiring, sales, investment, and enjoy better returns on assets.
Keywords: Fintech; Labor Demand; Job Postings; Technological Disruption
JEL Codes: G30; J23; O33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fintech exposure (G29) | decline in labor demand (J23) |
| fintech exposure (G29) | job posting shares (M51) |
| fintech exposure (G29) | upskilling strategy (J24) |
| fintech exposure (G29) | employment growth (O49) |
| fintech exposure (G29) | sales growth (O49) |
| fintech exposure (G29) | return on assets (G32) |