Financialization and the labor share of income

Artikel

Financialization has been growing importance in macroeconomic perspectives since the finance-dominated capitalist relations have captured many of the specific positions in an aggregate economy. However, the empirical literature has substantially ignored the examination of the link between an increasing scale of financialization and the rising income inequality. In this study, a major hypothesis is based on the fact that the finance-dominated capitalism has a considerable effect on distributional practices through the channels of bargaining power. By applying the Kaleckian approach, the paper investigates the relationship between financialization and the labor share of national income using a panel dataset of 52 countries over the 1992-2012 period. The results suggest that a higher level of stock market development leads to a more unequal distribution of income and, thus, to the decline of wage share in the national income. Other factors such as globalization and technical change can also exacerbate the decline of wages, coupled with a decrease in the bargaining position of labor measured by unemployment rate and labor force participation rate.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Review of Economic Perspectives ; ISSN: 1804-1663 ; Volume: 19 ; Year: 2019 ; Issue: 4 ; Pages: 265-306 ; Warsaw: De Gruyter

Classification and Topics

• Classification: Wirtschaft ; Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts ; Aggregate Factor Income Distribution ; Labor-Management Relations; Industrial Jurisprudence
• Subject: Bargaining Power ; Financialization ; Globalization ; Labor Share ; Stock Markets

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Özdemir, Onur
• Event: Veröffentlichung
• (who): De Gruyter
• (where): Warsaw
• (when): 2019

Further information

• DOI: doi:10.2478/revecp-2019-0015
• Handle: http://hdl.handle.net/10419/227532
• Last update: 10.03.2025, 11:44 AM CET