The effect of financialization on labor's share of income
AbstractNumerous studies have analyzed the decline in labor's share of income, but only few have linked it to the increase in financialization. The process of financialization can roughly be described as an increasing importance of the financial sector which had an impact on the distribution between wages and profits on the one hand, and retained earnings and financial income in the form of dividends and interests on the other hand. This paper seeks to explore the relationship between financialization and labor's share of income using a time-series cross-section data set of 13 countries over the time period from 1986 until 2007. The results suggest that there is indeed a relationship between increasing dividend and interest payments of non-financial corporations and the decline of the share of wages in national income. Other factors that can be accounted for the decline relate to globalization and a decrease in the bargaining power of labor. --
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Bibliographic InfoPaper provided by Berlin School of Economics and Law, Institute for International Political Economy (IPE) in its series IPE Working Papers with number 17/2013.
Date of creation: 2013
Date of revision:
Financialization; functional income distribution; labor's share;
Find related papers by JEL classification:
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-MAC-2013-02-03 (Macroeconomics)
- NEP-PKE-2013-02-03 (Post Keynesian Economics)
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- [A&C] The effect of financialization on labor's share of income
by Lorenzo Battisti in Pensieri Economici on 2013-07-03 13:59:00
- Riccetti, Luca & Russo, Alberto & Gallegati, Mauro, 2013. "Financialisation and Crisis in an Agent Based Macroeconomomic Model," MPRA Paper 51074, University Library of Munich, Germany.
- Dünhaupt, Petra, 2013. "Determinants of functional income distribution : theory and empirical evidence," ILO Working Papers 484122, International Labour Organization.
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