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Some New Insights on Financialisation and Income Inequality

Marwil Dávila-Fernández and Lionello F. Punzo ()

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: In this paper, we study the relationship between income distribution and financialisation in the United States after the Second World War. Financialisation is introduced as a two-fold process. On the one hand, it can be understood as an increase in the contribution of the financial sector regarding the composition of production, or a flow dimension. On the other hand, we can see it as an increase in the importance of financial assets in terms of the composition of wealth, or a stock dimension. We make use of the share of financial employment on total employment as a proxy of the first dimension while wealth composition is measured as the share of financial assets on corporations' total assets. Applying cointegration techniques, we identied a positive long-run relationship between financialisation and income inequality. Causality goes from the flow dimension to inequality and from inequality to the stock dimension.

Keywords: Financialisation; Income inequality; Wealth; United States. (search for similar items in EconPapers)
JEL-codes: O14 O15 O16 (search for similar items in EconPapers)
Date: 2018-12
New Economics Papers: this item is included in nep-his
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