Financialization drives earnings inequality nearly as much as declining unionization

Evidence

The counterfactual estimate from our models is that unionization was associated with 14.8% of the growth in earnings dispersion, net of other industry-level controls. Thus, the impact of financialization on earnings dispersion is almost as large as that of declining unionization. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 164

Categorization

• XREF: connects to: US income inequality roughly doubled between 1980 and 2007. — Mark Blyth, Austerity: The History of a Dangerous…, 59; Financial income reallocates resources away from workers and strengthens owner bargaining power; Financialization raises earnings inequality across most US industries — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 152 (+7 more)

Related

• Financialization raises earnings inequality across most US industries (similarity 0.92)
• Deunionization still leaves much wage inequality unexplained, pointing to financialization (similarity 0.91)
• Financialization independently explains over half of labor’s falling income share since 1970. (similarity 0.89)
• Financialization caused most of the decline in labor’s income share since 1970 (similarity 0.88)
• Financialization may be a root cause behind union decline and offshoring (similarity 0.87)
• Inequality dimensions reflect one institutional shift toward financialization (similarity 0.87)
• Financialization channels income toward the wealthy and depresses productive investment and wages. (similarity 0.86)
• Unionization decreases income inequality by disciplining employer power (similarity 0.86)
• Financial-sector workers’ pay since the 1980s far outstripped national averages, driving inequality. (similarity 0.85)
• Most earnings inequality growth occurred within industries, not between them. (similarity 0.85)
• Declining industries show rising earnings inequality (similarity 0.84)
• Prior research linked financialization to inequality mostly indirectly, not causally. (similarity 0.84)
• Counterfactual independence assumptions likely understate financialization’s true inequality impact (similarity 0.84)
• Financialization caused roughly three-quarters of the labor share decline by 1997. (similarity 0.84)
• Income inequality reflects relative bargaining power between actor groups, not markets (similarity 0.83)

Broader Connections

• Financialization theory links wage-compromise collapse and shareholder value to inequality #expands (0.85) — Natascha van der Zwan, Making Sense of Financialization, 109
• Unionization decreases income inequality by disciplining employer power #corroborates (0.75) — Nikole Hannah-Jones et al., The 1619 Project, 583
• Financialization establishes ideological dominance of individual profit over collective interests #expands (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 109
• Financialization drives the rise of precarious labor and dissolves social bonds #expands (0.72) — Max Haiven, Cultures of Financialization, 141