Factors generating and transmitting the financial crisis; Functional distribution of income
Jo Michell ()
Working papers from Financialisation, Economy, Society & Sustainable Development (FESSUD) Project
The distribution of income between capital and labour has, until very recently, been ignored by the majority of the economics profession. At the same time, the rate of wage growth has systematically lagged the growth of productivity, leading to a fall in the share of wages in total income. This paper considers the links between shifts in the functional distribution of income, rising personal income inequality and the mechanisms which led to the financial crisis of 2007-2008. The paper argues that the most widespread explanation for increasing inequality - increasing demand for skilled labour due to technological change - is not convincing, and that political factors have played an important role. Mechanisms by which inceasing inequality feed through into financial instability are considered. These include debt as an insurance mechanism against greater income volatility; debt as an adjunct to emulative consumption behaviour; debt as a political tool to defuse the growing gap between wages and productivity; and debt as a way to overcome the stagnationary macroeconomic effects of rising inequality.
Keywords: Aggregate Factor Income Distribution; Financial Crises (search for similar items in EconPapers)
JEL-codes: E25 G01 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
http://fessud.eu/wp-content/uploads/2013/04/Factor ... orking-Paper-411.pdf Full text (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fes:wpaper:wpaper41
Access Statistics for this paper
More papers in Working papers from Financialisation, Economy, Society & Sustainable Development (FESSUD) Project FESSUD Co-ordinator (Malcolm Sawyer) Leeds University Business School Maurice Keyworth Buidling Leeds LS2 9JT.
Series data maintained by Helen Evans ().