Financialization, labor market institutions and inequality

Ups and downs in finance, ups without downs in inequality

“…Previous literature examined this relationship broadly through two channels, the financialization of non-financial firms or the increasing number of well-paid bankers. The first strand of literature argues that with financialization, non-financial firms prioritize shareholder interest through dividend disbursement and downsizing of the workforce (Goldstein 2012;Dünhaupt 2014;Huber et al 2020;Hager 2020). This structural change 5…”

“…Since then, research concentrating on the period of upswing in finance in the 1990s and 2000s has shown that financialization contributed significantly to rising income inequality (Tomaskovic-Devey and Lin 2011; Lin and Tomaskovic-Devey 2013;Godechot 2012;Kus 2012;Dünhaupt 2014;Flaherty 2015;Denk and Cournède 2015;Roberts and Kwon 2017;Huber, Petrova, and Stephens 2020; Lin and Tobias Neely 2020; see also Hager 2020). Systematic comparisons with cross-country macro data suggest that an increasing number of handsomely paid financiers is the key determinant of increasing top income shares (Kus 2012;Dünhaupt 2014;Godechot 2016;Huber et al 2020). However, while the first prong of the public controversy has been scrutinized in depth, the second has received little attention and the finance-inequality nexus in the post-crisis period has been left unexplored.…”

Exit, control, and politics: The structural power of finance under asset manager capitalism

“…Although Greta Krippner emphasized aggregate demand deficiency as the macroeconomic problem that financial deregulation sought to address, the subsequent literature has largely neglected the macroeconomic dimension of financialization. Instead, the literature has tended to break financialization down into its sectoral components, studying how households, corporations, and states turn to finance for investment and/or borrowing purposes; 2 and to document the income-and wealth-inequality increasing effects of these financialization processes (Godechot, 2016;Huber et al, 2020;Lin & Tomaskovic-Devey, 2013). From a macroeconomic perspective, there are two main problems with this approach.…”

Financialization and union decline in Canada: The influence on sectors and core industries

“…A final issue of importance is the varied ways that financialization is linked to the restructuring of labour markets across ‘models of capitalism’ (Deeg, 2009). Traditionally, Varieties of Capitalism literature has argued that firms in coordinated market economies as in Western Europe are less affected by the process of financialization as they rely more on traditional banking than stock markets for financing their activities (Huber et al., 2018; Thelen, 2014). Following this logic, the impact of finance on inequality should be uneven across countries, as institutional differences in financial sectors shape firm operations.…”

“…First, drawing on longitudinal data from multiple national and international sources, the paper examines how financialization is driving changes to corporate governance and labour relations in Canada and asks whether Canadian developments are having similarly negative impacts on union density. This is an important exercise given recent evidence suggesting that the dominant narrative on financialization is overly inspired by developments in the United States, at the national level and often overlooks how it can be mitigated or accelerated by local institutions, national politics or industrial characteristics (Huber et al., 2018; Stockhammer, 2008).…”