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The impact of financialisation on the wage share. A theoretical clarification and empirical test

Research output: Contribution to journalArticle

Karsten Kohler, Alexander Guschanski, Engelbert Stockhammer

Original languageEnglish
Pages (from-to)937–974
Issue number4
Early online date25 Jul 2019
Accepted/In press21 Feb 2019
E-pub ahead of print25 Jul 2019
PublishedJul 2019

King's Authors


It is frequently asserted that financialisation has contributed to the decline in the wage share. This paper provides a theoretical clarification and a systematic empirical investigation. We identify four channels through which financialisation can affect the wage share: (1) enhanced exit options of firms; (2) rising price mark-ups due to financial overhead costs for businesses; (3) increased competition on capital markets; and (4) the role of household debt in increasing workers’ financial vulnerability and undermining their class consciousness. The paper compiles a comprehensive set of empirical measures of financialisation and uses it to test these hypotheses with a panel regression of 14 OECD countries over the 1992-2014 period. We find strong evidence for negative effects of financial liberalisation and financial payments of non-financial corporations on the wage share that are in the same order of magnitude as the effects of globalisation.

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