Rentier Incomes and Financial Crises: An Empirical Examination of Trends and Cycles in Some OECD Countries

Abstract

We present new estimates of the rentier share of national income for OECD countries for the years between 1960 and 2000. For most countries, the rentier share of income significantly increased during the last several decades, starting in the early 1980's and coinciding with the shift to neo-liberal monetary and financial policies initiated by Margaret Thatcher and Paul Volcker. There is no evidence of a negative correlation between rentier shares and non-financial corporate shares of income. However, rentier shares do decline in those semi-industrialized countries that experienced financial crises. These findings are consistent with the view that financial liberalization has been associated with the increased power of an international rentier class, whose interests are aligned with those of non-financial corporations in the richer countries, but whose interests conflict with rentiers in developing countries that experience financial crises.3

Interest rates, distribution and capital accumulation – A post-Kaleckian perspective on the US and Germany

“…Excluding these payments from profits, the profit rate of the non-financial corporate sector has remained constant in France and has increased only slightly in the US. In a more general study on 29 OECD countries focusing on the development of the share of rentiers' income in GDP, Epstein and Power (2003) confirm the results by Dumenil and Levy. Epstein and Power show that the share of rentiers' income in GDP increased at the expense of the wage share in most countries during the 1980s until the early 1990s.…”

“…Since nominal interest payments also compensate for capital losses due to inflation, Epstein and Jayadev (2005) have extended the analysis for 15 OECD countries (196015 OECD countries ( -2000, correcting the share of rentiers' income in GDP for inflation. Applying this method, they mainly confirm the earlier results by Epstein and Power (2003). Marterbauer and Walterskirchen (2002) have estimated the determinants of the adjusted wage share for Austria, Germany and several other European countries from 1970 to 2000.…”

Top incomes under finance-driven capitalism, 1990–2010: power resources and regulatory orders

“…Accordingly, CEO pay is now 262 times that of the average worker, with stock options comprising a sizeable proportion of compensation packages (Kus, 2012, p. 485). The corresponding rise in the financial sector's share of profits, coupled with strong growth in rentier incomes linked to ownership of financial assets, thus suggests a profound upward transfer effect related to the rise of the financial sector (Epstein and Power, 2003;Volscho and Kelly, 2012). Conversely for labour, as real wages remained stagnant during periods of finance-driven growth, falling wage shares stifled consumption demand, leading to the emergence in many developed countries of a debt-driven growth model where easy access to credit fuelled domestic demand (Stockhammer, 2012).…”

The Macroeconomics of Shadow Banking

“…Yet, it may well reflect the outstanding evidence about rentiers' increasing capacity to 'appropriate' larger parts of domestic income also through complex financial relations. Indeed, there is no doubt that new financial dynamics, and the connected rise in rentier-type income (versus labour income) lie behind the rising inequality registered in developed countries in the last decades (Epstein and Power, 2003;Piketty, 2014 conceded to workers through time. In turn, this has raised workers' wealth (by raising dwellings' price), as well as their corresponding indebtedness.…”