Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/184784 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 833
Publisher: 
Queen Mary University of London, School of Economics and Finance, London
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 fueled 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.
Subjects: 
Income distribution
labour share
wage gap
inequality
capital intensity
globalisation
financialisation
JEL: 
D33
E25
Document Type: 
Working Paper

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