From Clerks to Agentic-AI: How will Technology Change Labor Market in Finance?
TLDR
This paper tracks how technological waves (computerization, passive investing, AI) have impacted labor productivity in financial asset management.
Key contributions
- Identifies three tech waves in finance: computerization, passive investing, and AI/automation.
- Tracks labor productivity in asset management using assets under management per employee.
- Compares AUM/employee, revenue/employee, and operating expense intensity across these waves.
- Documents stylized facts on how technology changes the scale of asset management work.
Why it matters
This paper provides empirical context on how technology has historically reshaped labor in finance. Understanding these trends is crucial for anticipating future impacts, especially with the ongoing AI and automation wave. It offers insights into productivity shifts.
Original Abstract
Financial firms have gone through three major technological waves: computerization in the 1980s and 1990s, the rise of indexing and passive investing in the 2000s and 2010s, and the AI and automation wave from roughly 2015 to the present. This project studies how much labor is required to manage capital across those waves by tracking a simple productivity measure: assets under management per employee. Using a small panel of representative firms, we compare changes in AUM per employee, revenue per employee, and operating expense intensity over time. The goal is not to identify causal effects, but to document stylized facts about how technology changes the scale of asset management work.
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