Marwil J. Dávila-Fernández
DEPS, USiena
Lionello F. Punzo
DEPS, USiena
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.
Jel Codes
O14; O15; O16
