EconPapers    
Economics at your fingertips  
 

The impact of financialisation on the wage share: a theoretical clarification and empirical test

Karsten Kohler (), Alexander Guschanski () and Engelbert Stockhammer ()

Cambridge Journal of Economics, 2019, vol. 43, issue 4, 937-974

Abstract: It is frequently asserted that financialisation has contributed to the decline in the wage share. This paper provides a theoretical clarification and a systematic empirical investigation. We identify four channels through which financialisation can affect the wage share: (i) enhanced exit options of firms; (ii) rising price mark-ups due to financial overhead costs for businesses; (iii) increased competition on capital markets and (iv) the role of household debt in increasing workers’ financial vulnerability and undermining their class consciousness. The paper compiles a comprehensive set of empirical measures of financialisation and uses it to test these hypotheses with a panel regression of 14 advanced countries over the 1992–2014 period. We find strong evidence for negative effects of financial liberalisation and financial payments of non-financial corporations on the wage share, which are in the same order of magnitude as the effects of globalisation.

Keywords: Financialisation; Income distribution; Political economy; Corporate governance (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1093/cje/bez021 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: The impact of financialisation on the wage share: A theoretical clarification and empirical test (2019) Downloads
Working Paper: The impact of financialisation on the wage share: a theoretical clarification and empirical test (2018) Downloads
Working Paper: The impact of financialisation on the wage share. A theoretical clarification and empirical test (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:cambje:v:43:y:2019:i:4:p:937-974.

Ordering information: This journal article can be ordered from
http://www.oup.co.uk/journals

Access Statistics for this article

Cambridge Journal of Economics is currently edited by Jacqui Lagrue

More articles in Cambridge Journal of Economics from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2020-07-11
Handle: RePEc:oup:cambje:v:43:y:2019:i:4:p:937-974.