An Empirical Analysis of the Impact of Financialisation on the Rate of Profit for the US (1955–2019)

Abstract

The purpose of this article is to examine the relationship between financialisation and functional income distribution. To this end, we empirically analyse the relationship between financialisation, the real wage level and the rate of profit in the US (1955–2019) using structural vector autoregressive modelling. According to our results, while an increase in financialisation leads to changes in the rate of profit with ambiguous signs and unclear statistical significance, financialisation has a clear, negative and persistent effect on the real wage level. We conclude with a reconsideration of the role of financialisation in shaping functional income distribution, as it appears to contribute directly to restraining real wage levels rather than directly impacting profitability.