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A Kaleckian approach to financialization and functional income distribution: Austria and Finland in comparative perspective

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  • Dabrowski, Cara
  • Kuhls, Sonia

Abstract

In this paper, we examine if and to what extent the Kaleckian theory of mark-up pricing can explain changes in functional income distribution in an environment of financialization. Following this approach, we expect financialization to influence the aggregate wage share through three channels: (1) sectoral recomposition, (2) financial overhead costs and rentiers' profits claims, and (3) bargaining power of trade unions and workers. We empirically analyze the long-term trends for each of the channels before and after the Great Financial Crisis and the Great Recession for Austria and Finland. Overall, we find evidence for all three re-distributional channels contributing to the changes in functional income distribution. The explanatory power of the individual channels, however, differs strongly due to the heterogeneity of the countries.

Suggested Citation

  • Dabrowski, Cara & Kuhls, Sonia, 2024. "A Kaleckian approach to financialization and functional income distribution: Austria and Finland in comparative perspective," IPE Working Papers 229/2024, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    • Handle: RePEc:zbw:ipewps:287769
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    References listed on IDEAS

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    1. Toni Ahlqvist & Sami Moisio, 2014. "Neoliberalisation in a Nordic State: From Cartel Polity towards a Corporate Polity in Finland," New Political Economy, Taylor & Francis Journals, vol. 19(1), pages 21-55, January.
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    6. Petra Dünhaupt, 2017. "Determinants of labour’s income share in the era of financialisation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 41(1), pages 283-306.
    7. Vaittinen, Risto & Vanne, Reijo, 2020. "Finland’s slow recovery from the financial crisis: A demographic explanation," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    8. Charles J. Whalen, 2021. "Post-Keynesian Institutionalism and the Failure of Neoliberalism: Returning Realism to Economics by Highlighting Economic Insecurity as the Flip Side of Financialization," Journal of Economic Issues, Taylor & Francis Journals, vol. 55(2), pages 469-476, April.
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    1. Dabrowski, Cara, 2025. "A Kaleckian approach to the financialization-distribution-inflation nexus: Germany and Austria in comparative perspective," IPE Working Papers 250/2025, Berlin School of Economics and Law, Institute for International Political Economy (IPE).

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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