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The Correlates of Rentier Returns in OECD Countries

Author

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  • Gerald Epstein
  • Arjun Jayadev

Abstract

This paper examines the correlates of rentier returns – returns to the ownership of financial assets – in a sample of OECD countries between 1960 and 2000. The authors develop a simple bargaining model among three classes – industrial capitalists, rentiers and workers – and show that rentier income returns increase when domestic and foreign real interest rates rise, costs of capital mobility fall, and the power of labor declines. Using an unbalanced panel dataset, the paper also econometrically investigates the impacts of proxies for these variables on rentier incomes. The authors find that interest rate liberalization, reductions in the unionization rate of labor, and increased returns from foreign financial investments increase rentier returns. These results provide support both for the simple model and for common Post-Keynesian and Marxian stories of the impact of financialization and neo-liberal policy changes on income shares.

Suggested Citation

  • Gerald Epstein & Arjun Jayadev, 2007. "The Correlates of Rentier Returns in OECD Countries," Working Papers wp123, Political Economy Research Institute, University of Massachusetts at Amherst.
  • Handle: RePEc:uma:periwp:wp123
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    File URL: https://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_101-150/WP123.pdf
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    Citations

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    Cited by:

    1. Amrita Chhachhi & Kade Finnoff & Arjun Jayadev, 2014. "Rethinking Labour Market Policy: Alternative Manifestos," Development and Change, International Institute of Social Studies, vol. 45(5), pages 1155-1171, September.
    2. Luciano BOGGIO & Vincenzo DALL’AGLIO & Marco MAGNANI, 2010. "On Labour Shares in Recent Decades: A Survey," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 118(3), pages 283-333.
    3. Peter Skott, 2013. "Increasing Inequality and Financial Instability," Review of Radical Political Economics, Union for Radical Political Economics, vol. 45(4), pages 478-488, December.
    4. Peter Skott, 2011. "Heterodox macro after the crisis," UMASS Amherst Economics Working Papers 2011-23, University of Massachusetts Amherst, Department of Economics.
    5. Thomas I. Palley, 2007. "Financialization: What It Is and Why It Matters," Economics Working Paper Archive wp_525, Levy Economics Institute.
    6. Szabolcs Szikszai & Tamas Badics, 2014. "Enhanced Funds Seeking Higher Returns," Working papers wpaper43, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.

    More about this item

    Keywords

    Rentier; Functional Distribution; Neoliberalism; Financialization;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • B5 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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