IDEAS home Printed from https://ideas.repec.org/a/aka/soceco/v39y2017i2p183-212.html
   My bibliography  Save this article

Functional Income Distribution in Portugal: The Role of Financialisation and Other Related Determinants

Author

Listed:
  • Ricardo Barradas

    (Instituto Universitário de Lisboa (ISCTE-IUL), Dinâmia’CET-IUL, Lisboa, Portugal
    Instituto Politécnico de Lisboa, Lisboa, Portugal)

  • Sérgio Lagoa

    (Department of Political Economy, Instituto Universitário de Lisboa (ISCTE-IUL), Dinâmia’CET-IUL, Lisboa, Portugal)

Abstract

This paper provides an empirical analysis of the relationship between the labour income share and financialisation, as well as other related variables in Portugal from 1978 to 2012. We estimate an equation for the labour share that includes standard variables (technological progress, globalisation, education and business cycle) and variables to capture the effect of financialisation. We formulate the hypothesis that the financialisation process may lead to a rise in the inequality of functional income distribution through three channels: the change in the sectoral composition of the economy (due to both the increase in the weight of financial activity and the decrease in government activity), the diffusion of shareholder value governance practices and the weakening of trade unions. Our results show that the financialisation process has an indirect long-term effect on the labour share through its impact on government activity and trade union density. The paper also finds evidence supporting the traditional explanations for functional income distribution, namely globalisation, education and business cycle.

Suggested Citation

  • Ricardo Barradas & Sérgio Lagoa, 2017. "Functional Income Distribution in Portugal: The Role of Financialisation and Other Related Determinants," Society and Economy, Akadémiai Kiadó, Hungary, vol. 39(2), pages 183-212, June.
    • Handle: RePEc:aka:soceco:v:39:y:2017:i:2:p:183-212
    Note: The authors are grateful for the helpful comments and suggestions of two anonymous referees, Bahram Pesaran, Eckhard Hein, Helena Lopes, M. Hashem Pesaran, the participants in the third FESSUD Annual Conference (Warsaw, October 2014), the participants in INFER Workshop on Heterodox Economics (Faculty of Economics – University of Coimbra, April 2015) and the participants in Dinâmia’CET-IUL Workshop on Dinâmicas Socioeconómicas e Territoriais Contemporâneas (Instituto Universitário de Lisboa – ISCTE-IUL, June 2015). The usual disclaimer applies.
    as

    Download full text from publisher

    File URL: http://www.akademiai.com/doi/pdf/10.1556/204.2017.39.2.2
    Download Restriction: subscription
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diogo Correia & Ricardo Barradas, 2021. "Financialisation and the slowdown of labour productivity in Portugal: A Post-Keynesian approach," PSL Quarterly Review, Economia civile, vol. 74(299), pages 325-346.
    2. Ricardo Barradas & Rishi Lakhani, 2024. "The finance–inequality nexus in the era of financialisation: Evidence for Portugal," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(3), pages 3510-3544, July.
    3. Ricardo Barradas & João Alcobia, 2024. "Determinants Of The Portuguese External Imbalances: The Lens Of Post-Keynesian Economics," Working Papers REM 2024/0334, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    4. George Petrakos & Kostas Rontos & Luca Salvati & Chara Vavoura & Ioannis Vavouras, 2024. "Income Inequality in the Over-Indebted Eurozone Countries and the Role of the Excessive Deficit Procedure," Open Economies Review, Springer, vol. 35(2), pages 301-322, April.
    5. Ricardo Barradas & Ines Tomas, 2023. "Household indebtedness in the European Union countries: Going beyond the mainstream interpretation," PSL Quarterly Review, Economia civile, vol. 76(304), pages 21-49.
    6. Ricardo Barradas, 2019. "Financialization and Neoliberalism and the Fall in the Labor Share: A Panel Data Econometric Analysis for the European Union Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 51(3), pages 383-417, September.
    7. João Carlos Lopes & José Carlos Coelho & Vítor Escária, 2021. "Labour productivity, wages and the functional distribution of income in Portugal: A sectoral approach," Society and Economy, Akadémiai Kiadó, Hungary, vol. 43(4), pages 331-354, December.
    8. Yuriy Bilan & Halyna Mishchuk & Natalia Samoliuk & Halyna Yurchyk, 2020. "Impact of Income Distribution on Social and Economic Well-Being of the State," Sustainability, MDPI, vol. 12(1), pages 1-15, January.
    9. João Alcobia & Ricardo Barradas, 2022. "Falling Labour Share and the Anaemic Growth in Portugal: a Post-Keynesian Econometric Analysis," Working Papers REM 2022/0247, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    10. Ana Romão & Ricardo Barradas, 2024. "Macroeconomic determinants of households' indebtedness in Portugal: What really matters in the era of financialisation?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 383-401, January.
    11. João Alcobia & Ricardo Barradas, 2023. "Functional Income Distribution And Secular Stagnation In Europe: An Analysis Of The Post-Keynesian Growth Drivers," Working Papers REM 2023/0283, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.

    More about this item

    Keywords

    financialisation; inequality; Portuguese functional income distribution; cointegration; ARDL models;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aka:soceco:v:39:y:2017:i:2:p:183-212. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kriston, Orsolya (email available below). General contact details of provider: https://akademiai.hu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.