The Multidimensional Effects of Financialization on the Growth of Income Inequality: New Empirical Evidence for 97 Countries

Year 2020, Volume: 7 Issue: 2, 213 - 237, 26.08.2020

Onur Özdemir

https://doi.org/10.17336/igusbd.661102

Cited By: 1

Abstract

Increasing financial relations and transactions, which constitute one of the important components of income inequality, is the leading factor that should be considered in analyzing the transformations of internal dynamics of current economies. In this sense, the linkage of the changes in financial sector, which is examined under the concept of financialization, with income inequality is the basis of this study. The financialization-income inequality nexus deals with the period of 1991-2014 for 97 countries by way of analyzing with the fixed effects method. According to the empirical results, which include labor market variables as well as economic variables, there is a positive correlation between financialization and income inequality. In other words, increasing the scale of financial relations and transactions has a positive effect on income inequality. The empirical outputs point out that this fact mainly depends on the current transformation in the labor markets. The reduction in the bargaining power of labor is assumed to have an increasing effect on the level of income inequality within the framework of financialization.

Keywords

Financialization, Income Inequality, Bargaining Power, Labor Markets, Globalization

Finansallaşmanın Gelir Eşitsizliği Artışı Üzerine Çok Boyutlu Etkileri: 97 Ülke İçin Yeni Ampirik Kanıtlar

Abstract

Gelir eşitsizliği olgusunun önemli bileşenlerinden birini oluşturan artan finansal ilişkiler ve işlemler mevcut ekonomilerin iç yapısında yaşanan dönüşümlerin analiz edilmesinde göz önünde bulundurulması gereken faktörlerin başında gelmektedir. Bu çerçevede, finansallaşma kavramı altında incelenen finans sektöründe yaşanan değişimlerin gelir eşitsizliği ile olan bağlantısı mevcut çalışmanın temelini oluşturmaktadır. Sabit etkiler yöntemine bağlı olarak incelenecek olan finansallaşma-gelir eşitsizliği bağıntısı 97 ülke için 1991-2014 yılları arasını ele almaktadır. İktisadi değişkenlerin yanı sıra emek piyasası değişkenlerinin de içerildiği ampirik sonuçlara göre finansallaşma ile gelir eşitsizliği arasında pozitif bir korelasyon bulunmaktadır. Diğer bir deyişle, artan finansal ilişkilerin ve işlemlerin gelir eşitsizliğini artırıcı bir etkisi bulunmaktadır. Ampirik çıktılar bu durumun temel olarak emek piyasalarında yaşanan dönüşüme bağlı olduğuna işaret etmektedir. Emeğin pazarlık gücündeki düşüşün finansallaşma çerçevesinde gelir eşitsizliğini artırıcı bir etkide bulunduğu varsayılmaktadır. 

Keywords

Finansallaşma, Gelir Eşitsizliği, Pazarlık Gücü, Emek Piyasaları, Küreselleşme

References

• ALBO, G., GINDIN, S., PANITCH, L. (2010). In and Out of Crisis: The Global Financial Meltdown and Left Alternatives. Oakland: Spectre PM Press.
• BALDER, J. M. (2018). Financialization and Rising Income Inequality: Connecting the Dots. Challenge, 61(3), pp. 240-264.
• BECK, T., DEMİRGUC-KUNT, A., LEVINE, R. (2000). A New Database on Financial Development and Structure. World Bank Economic Review, 14, pp. 597-605.
• BECK, T., DEMİRGUC-KUNT, A., LEVINE, R. (2009). Financial Institutions and Markets Across Countries and Over Time: Data and Analysis. World Bank Policy Research Working Paper No. 4943, May.
• ČIHÁK, M., DEMİRGUC-KUNT, A., FEYEN, E., LEVINE, R. (2012). Benchmarking Financial Development Around the World. World Bank Policy Research Working Paper No. 6175, August.
• DORE, R. (2002). Stock Market Capitalism and its Diffusion. New Political Economy, 7(1), pp. 115-121.
• DRISCOLL, C. J., KRAAY, C. A. (1998). Consistent Covariance Matrix Estimation with Spatially Dependent Panel Data. Review of Economics and Statistics, 80(4), pp.549-560.
• DUMENIL, G., LÉVY, D. (2004a). Capital Resurgent: Roots of the Neoliberal Revolution. Cambridge, Massachusetts and London: Harvard University Press.
• DUMENIL, G., LÉVY, D. (2004b). The Real and Financial Components of Profitability (United States, 1952-2000). Review of Radical Political Economics, 36(1), pp. 82-110.
• DUMENIL, G., LÉVY, D. (2011). The Crisis of Neoliberalism. Cambridge, Massachusetts and London: Harvard University Press.
• DUNHAUPT, P. (2014). An Empirical Assessment of the Contribution of Financialization and Corporate Governance to the Rise in Income Inequality. Working Paper No. 41, Berlin: Institute for International Political Economy.
• EPSTEIN, G. (2001). Financialization, Rentier Interests, and Central Bank Policy. Paper Presented for PERI Conference on “Financialization and the World Economy”, December 7-8, University of Massachusetts, Amherst.
• EPSTEIN, G. (2005). Introduction: Financialization and the World Economy. Financialization and the World Economy, In: G. Epstein (ed.), pp. 3-16, Cheltenham, UK and Northampton, MA, USA: Edward Elgar.
• FOSTER, J. B. (2007). The Financialization of Capitalism. Monthly Review, 58(11), April.
• FOSTER, J. B. (2010). The Financialization of Accumulation. Monthly Review, 62(5), October.
• FOSTER, J. B. (2015). The New Imperialism of Globalized Monopoly-Finance Capital: An Introduction. Monthly Review, 67(3), July.
• GLYN, A. (2006). Capitalism Unleashed: Finance Globalization and Welfare. Oxford, New York: Oxford University Press.
• GYGLI, S., HAELG, F., POTRAFKE, N., STURM, J.-E. (2019). The KOF Globalisation Index – Revisited. Review of International Organizations, 14(3), pp. 543-574.
• IM, S. K., PESARAN, M. H., SHIN, Y. (2003). Testing for Unit Roots in Heterogeneous Panels. Journal of Econometrics, 115(1), pp. 53-74.
• KRIPPNER, R. G. (2004). What Is Financialization? mimeo, Department of Sociology, UCLA.
• KRIPPNER, R. G. (2005). The financialization of the American economy. Socio-Economic Review, 3(2), pp. 173-208.
• KRIPPNER, R. G. (2011). Capitalizing on Crisis: The Political Origins of the Rise of Finance. Cambridge, Massachusetts and London: Harvard University Press.
• LAPAVITSAS, C. (2009). Financialisation Embroils Developing Countries. Papeles de Europa, 19, pp. 108-139.
• LAPAVITSAS, C. (2010). Banks for the People. Redpepper, 170, February/March.
• MILIOS, J., SOTIROPOULOS, P. D. (2009). Financialization: Market Discipline or Capital Discipline? Rethinking Imperialism: A Study of Capitalist Rule, In: J. Milios and D. P. Sotiropoulos (eds.), pp. 167-183, London: Palgrave Macmillan.
• ÖZDEMİR, O. (2019). Gelir Eşitsizliği ve Finansallaşma Arasındaki İlişkinin Panel Veri Analizi: Farklı Gelir Grupları Üzerine Bir Uygulama. İnsan ve Toplum Bilimleri Araştırmaları Dergisi, 8(4), pp. 2837-2875.
• PAINCHEIRA, J. P. (2009). Finansallaşma Çağında Gelişmekte Olan Ülkeler: Açık Birikiminden Rezerv Birikimine. Maliye ve Finans Yazıları, 1(82).
• PALLEY, I. T. (2007). Financialization: What It Is and Why It Matters. Economics Working Paper Archive, Working Paper No: 525, Levy Economics Institute.
• SMITH, J. (2012). Outsourcing, Financialisation & the Crisis. International Journal of Management Concepts and Philosophy, 6(1/2), pp. 19-44.
• SOLT, F. (2009). Standardizing the World Income Inequality Database. Social Science Quarterly, 90(2), pp. 231-242.
• SOLT, F. (2016). The Standardized World Income Inequality Database. Social Science Quarterly, 97(5), pp. 1267-1281.
• SOLT, F. (2019). Measuring Income Inequality Across Countries and Over Time: The Standardized World Income Inequality Database. SWIID Version 8.2, November 2019. Available at https://fsolt.org/swiid/.
• STOCKHAMMER, E. (2004). Financialisation and the Slowdown of Accumulation. Cambridge Journal of Economics, 28(5), pp. 719-741.
• SWEEZY, M. P. (1997). More (or less) on Globalization. Monthly Review, 49(4), September.
• WADE, H. R. (2005). The March of Neoliberalism and What to Do About It. draft paper for plenary talk at conference Beyond ‘Deregulation’: Finance in the 21st Century, University of Sussex, 26-28 May.
• YELDAN, E. (2010). Küresel Kriz, İşsizlik ve İş Yaratmayan Büyüme. TİSK İşveren Dergisi, 47(10/11), pp. 21-29.