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The rise of finance and growing inequality

Ken-Hou Lin, University of Massachusetts Amherst

Abstract

The surge of inequality in the past three decades in the United States is associated with the financialization of the US economy. By financialization I refer to two interdependent processes. One is the increasing influence of the financial sector over the US economy. The second process is the increasing participation of the non-finance firms in the financial markets. Evidence presented in this dissertation shows that financialization has profound impacts on income dynamics and employment growth in the United States. As the centrality of the finance sector increases, financial firms and their favored workers capture more resources from the economy. When non-financial firms channel their resources and attention from the productive units to their financial arms, they exclude labor from the revenue generating process and therefore diminish the bargaining power of workers. Furthermore, as resources are engineered toward speculative activities and the shareholders, employment growth and security decline, particularly for middle-class workers. I discuss the policy implications at the end.^

Subject Area

Economics|Finance|Sociology|Labor relations

Recommended Citation

Lin, Ken-Hou, "The rise of finance and growing inequality" (2013). Doctoral Dissertations Available from Proquest. AAI3603115.
http://scholarworks.umass.edu/dissertations/AAI3603115

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