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Income distribution and the size of the financial sector

Carlo Panico () and Antonio Pinto ()
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Carlo Panico: Università degli Studi di Napoli "Federico II" (Federico II University of Naples)
Antonio Pinto: Università degli Studi di Napoli "Federico II" (Federico II University of Naples)

No CSWP15, Centro Sraffa Working Papers from Centro di Ricerche e Documentazione "Piero Sraffa"

Abstract: The paper deals with the influence of the size of financial industry on income distribution. In opposition to Piketty’s position, it argues that the wage share is influenced by changes in the size of the sectors of the economy, by the input composition of the productive structure and by the ability of the workers to capture the increases in productivity. The process of financialization experienced in the recent decades has affected these three elements. Among other things, it has enhanced the ability of the banking industry to affect the formation of monetary policy and legislation, which in turn can have had some bearing on the workers’ ability to appropriate the increases in productivity. After describing Piketty’s interpretation of the rise in inequality and discuss his views on the theories of distribution, the paper illustrates different representations of the financial sector proposed by the literature, underlining the relevance of considering this sector as an industry. By following these lines the pa-per describes how an enlarged size of the banking industry can increase inequality.

Keywords: Income distribution; growth; financial industry; financialization; multi-sectorial models (search for similar items in EconPapers)
JEL-codes: D30 E10 E44 G20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-hme and nep-mac
Date: 2015-12
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