Workforce demographics and market concentration shape income distribution independently

Evidence

In addition, our analysis identifies two new mechanisms that require further investigation. We find that, net of skill level and union density, the proportion of workers who are non-Hispanic white men is positively associated with labor’s share of income and negatively associated with earnings dispersion. We also find that industrial concentration is negatively associated with labor’s share of income but positively associated with officers’ compensation. We see both results as consistent with the thesis that income dynamics are shaped by the relative bargaining and claims-making power of actors in their organizational contexts. — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 171

Categorization

• QUESTION: Two novel mechanisms flagged as needing investigation: racial/gender workforce composition effects on labor share and concentration’s divergent effects on labor vs. officer pay are empirically rich leads.
• SEED: The finding that industrial concentration raises officer pay but cuts labor share is a crisp empirical hook for a piece on market power as an inequality mechanism.
• XREF: connects to: Corporate spin-offs inflate portfolio income measures independently of financial orientation — Greta R. Krippner, The Financialization of the American…, 90; Income disparity coincides with eroding middle-class security; Nonfinance firms increasingly derived income from financial markets — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 18 (+3 more)

Related

• Financialization independently explains over half of labor’s falling income share since 1970. (similarity 0.86)
• Inequality dimensions reflect one institutional shift toward financialization (similarity 0.84)
• Industrial concentration raises top officers’ share of compensation while employment size lowers it (similarity 0.82)
• Financialization caused most of the decline in labor’s income share since 1970 (similarity 0.82)
• Income inequality reflects relative bargaining power between actor groups, not markets (similarity 0.80)
• Internal work organization shapes income inequality independent of individual differences (similarity 0.80)
• Counterfactual independence assumptions likely understate financialization’s true inequality impact (similarity 0.80)
• US inequality since 1970 grew mostly within rather than between industries (similarity 0.80)
• Financialization caused roughly three-quarters of the labor share decline by 1997. (similarity 0.80)
• Financialization drives earnings inequality nearly as much as declining unionization (similarity 0.79)
• Deunionization still leaves much wage inequality unexplained, pointing to financialization (similarity 0.79)
• Financialization channels income toward the wealthy and depresses productive investment and wages. (similarity 0.79)
• Declining industries show rising earnings inequality (similarity 0.79)
• Labor’s share of income declined in the nonfinancial economy from 1970 to 2008 (similarity 0.78)

Broader Connections

• Counterfactual independence assumptions likely understate financialization’s true inequality impact #complicates (0.80) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 221
• Nonfinance firms increasingly derived income from financial markets #expands (0.78) — Ken-Hou Lin & Donald Tomaskovic-Devey, Financialization and U.S. Income…, 18
• Corporate spin-offs inflate portfolio income measures independently of financial orientation #expands (0.75) — Greta R. Krippner, The Financialization of the American…, 90
• Income disparity coincides with eroding middle-class security #expands (0.72)