Abstract
ABSTRACTThis article examines the impact of corporate financialization on the labour share using data for publicly listed non‐financial corporations across 14 European countries. We test hypotheses derived from industrial relations literature on financialization against competing explanations for the labour share decline based on technological change and market concentration. Our findings show that increased dividend and interest payments, as well as financial profits, are associated with a fall in the labour share. These results support theories linking corporate financialization to rising overhead costs, shareholder‐value orientation and increasing exit options for capital. We find no evidence that technological progress drives the decline in the labour share. While market concentration negatively correlates with the labour share, concentration has decreased during our sample period, suggesting that ‘superstar firms’ are also not the primary driver of changes in functional income distribution.
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