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Distributional Consequences of Capital Accumulation, Globalisation and Financialisation in the US

Author

Listed:
  • Marika Karanassou

    (Queen Mary University of London)

  • Hector Sala

    (Departament d'Economia Aplicada (UAB), IZA Fellow, Institute for the Study of Labor (Bonn))

Abstract

In this paper we examine the dynamic contributions of capital accumulation, globalisation, and financialisation to the functional-personal income distribution in the US over the 1968-2014 period. We show that the labour share is affected negatively by personal inequality, capital intensity and trade, while the Gini statistic is fuelled by the falling labour share and increasing financial assets and financial payments. Using counterfactual simulations, we show that trade is the most stable and unidirectional factor driving the labour share down since the eighties, and financialisation equally relevant in the eighties, but innocuous in the 1990s. We also document the growing relevance of capital accumulation and globalisation in driving personal inequality, although financialisation is the most important factor in absolute terms. In the post-Great Recession years of tense socioeconomic conditions, looking at income distribution through the lens of the wage-productivity gap could enlighten economic policy.

Suggested Citation

  • Marika Karanassou & Hector Sala, 2017. "Distributional Consequences of Capital Accumulation, Globalisation and Financialisation in the US," Working Papers 833, Queen Mary University of London, School of Economics and Finance.
    • Handle: RePEc:qmw:qmwecw:833
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    References listed on IDEAS

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    Cited by:

    1. John Hatgioannides & Marika Karanassou & Hector Sala, 2019. "Should the Rich be Taxed More? The Fiscal Inequality Coefficient," Journal of Economic Issues, Taylor & Francis Journals, vol. 53(3), pages 879-887, July.
    2. Sergio Lagoa & Emanuel Leao & Ricardo Paes Mamede & Ricardo Barradas, 2014. "Financialisation and the Financial and Economic Crises: The Case of Portugal," FESSUD studies fstudy24, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    3. Ricardo Barradas, 2023. "Why Has Labor Productivity Slowed Down in the Era of Financialization?: Insights from the Post-Keynesians for the European Union Countries," Review of Radical Political Economics, Union for Radical Political Economics, vol. 55(3), pages 390-422, September.
    4. 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.
    5. Dario JUDZIK & Hector SALA, 2013. "Productivity, deunionization and trade: Wage effects and labour share implications," International Labour Review, International Labour Organization, vol. 152(2), pages 205-236, June.

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    More about this item

    Keywords

    Income distribution; labour share; wage gap; inequality; capital intensity; globalisation; financialisation;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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