Distributional consequences of capital accumulation, globalisation and financialisation in the US

In this paper we examine the dynamic contributions of capital accumulation, globalisation, and financialisation to the functional-personal income distribution in the US over the 1968-2014 period. We show that the labour share is affected negatively by personal inequality, capital intensity and trade, while the Gini statistic is fueled by the falling labour share and increasing financial assets and financial payments. Using counterfactual simulations, we show that trade is the most stable and unidirectional factor driving the labour share down since the eighties, and financialisation equally relevant in the eighties, but innocuous in the 1990s. We also document the growing relevance of capital accumulation and globalisation in driving personal inequality, although financialisation is the most important factor in absolute terms. In the post-Great Recession years of tense socioeconomic conditions, looking at income distribution through the lens of the wage-productivity gap could enlighten economic policy.