Does the financial sector occupy too much human capital?
Abstract: This thesis studies if and when the size of the financial sectors starts to have a negative effect on economic growth. The size of the financial sector is modelled using employment in the sector. The study uses a panel data model with the EU15 countries covering the years from 1970 to 2007 (1985 to 2005 for some regressions). The results show that the positive contribution to growth of labour and skill allocated in the financial sector is diminishing, and that the diminishing aspect primarily acts through productivity. The effect does, however, not become negative.
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