Financialization and Income Inequality in the United States, 1967–2010

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Abstract

This article presents a historical overview of the late 20th-century advent of financialization, that is, the unprecedented growth of the financial sector. We summarize its origins and consequences, particularly greater income inequality. An econometric model quantifies the relationship. We conclude that along with higher unemployment and an eroding minimum wage, the growth of the U.S. financial sector has contributed to the exacerbation of inequality in recent decades.

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