The impact of financialisation on the wage share: a theoretical clarification and empirical test
Karsten Kohler (),
Alexander Guschanski () and
Engelbert Stockhammer ()
No PKWP1802, Working Papers from Post Keynesian Economics Society (PKES)
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: (1) enhanced exit options of firms; (2) rising price mark-ups due to financial overhead costs for businesses; (3) increased competition on capital markets and shareholder value orientation; and (4) 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 OECD 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 that are in the same order of magnitude as the effects of globalisation.
Keywords: financialization; income distribution; political economy (search for similar items in EconPapers)
JEL-codes: E25 F65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
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http://www.postkeynesian.net/downloads/working-papers/PKWP1802_MQ1APLF.pdf First version, 2018 (application/pdf)
Journal Article: The impact of financialisation on the wage share: a theoretical clarification and empirical test (2019)
Working Paper: The impact of financialisation on the wage share: A theoretical clarification and empirical test (2019)
Working Paper: The impact of financialisation on the wage share. A theoretical clarification and empirical test (2018)
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