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

Cara Dabrowski and Sonia Kuhls

No 229/2024, IPE Working Papers from Berlin School of Economics and Law, Institute for International Political Economy (IPE)

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.

Keywords: Finance-dominated capitalism; financialization; distribution; financial and economic crisis; Kaleckian theory of distribution (search for similar items in EconPapers)
JEL-codes: D31 D33 D43 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-eec, nep-hme and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ipewps:287769

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