Wage dispersion and pension funds: Financialisation of non-financial corporations in the USA

Ilhan Dögüs


The paper argues that wage dispersion between white-collar and blue-collar workers has caused the rise and expansion of pension funds in a direct and long-run structural manner in the USA. Using data from the Saez-Zucman and the St. Louis Fed’s FRED datasets, the argument is empirically analysed on yearly data for the period 1964-2012 in the USA. The results confirm the existence of a long-run relationship of causality from wage dispersion to the share of pension funds within US households’ financial wealth. Applying a vector error correction model to the data it emerges that the variance in pension funds due to wage dispersion starts to rise after the fifth period, and reaches 69% in the tenth period. .


financialisation, pension funds, wage dispersion, savings

Full Text:



Acemoglu D. (2003), “Patterns of Skill Premia”, The Review of Economic Studies, 70 (2), pp. 199-230.

Acemoglu D. and Autor D.H. (2010), “Skills, Tasks and Technologies: Implications for Employment and Earnings”, NBER Working Paper, n. 16082, Cambridge (MA): National Bureau of Economic Research.

Autor D.H. (2014), “Skills, Education, and the Rise of Earnings Inequality among the ‘Other 99 Percent’”, Science, 344 (6186), pp. 843-851.

Blanchflower D.G. and Oswald A.J. (1990), “The Determination of White Collar Pay”, Oxford Economic Papers, 42 (2), pp. 356-378.

Braga J C., de Oliveria G.C., Palludeto A.W.A. and de Deos S.S. (2017), “For a Political Economy of Financialization: Theory and Evidence”, Economia e Sociedade, Campinas, 26 (special issue), pp. 829-856.

Brooks C. (2008), Introductory Econometrics for Finance, Cambridge: Cambridge University Press.

Bonizzi B. (2015), “Capital Market Inflation in Emerging Markets: The Cases of Brazil and South Korea”, PSL Quarterly Review, 68 (273), pp. 115-150.

Bonizzi B. and Churchill J. (2016), “Pension Funds and Financialisation in the European Union”, Revista de Economía Mundial, 46 (2017), pp. 71-90.

Bonizzi B. (2017), “International Financialisation, Developing Countries and the Contradictions of Privatised Keynesianism”, Economic and Political Studies, 5 (1), pp. 21-40.

Cynamon B.Z. and Fazzari S.M. (2013), “Inequality and Household Finance During the Consumer Age”, Levy Economics Institute Working Paper, n. 752, Annandale-on-Hudson (NY): Levy Economics Institute of Bard College.

Darcillon T. (2012), “Do Interactions Between Finance and Labor Market Institutions Affect Wage Distribution?”, CES Working Paper, n. 2012.89, Paris: Centre d’Economie de la Sorbonne-CES; available at: https://halshs.archives-ouvertes.fr/halshs-00768908/document

Davis L.E. (2013), “Financialization and the Nonfinancial Corporation: An Investigation of Firm Level Investment Behavior in the U.S., 1971-2011”, Economics Department Working Paper Series, n. 161, Amherst: Department of Economics, University of Massachusetts Amherst.

Deleidi M. (2017), “Post Keynesian Endogenous Money Theory: A Theoretical and Empirical Investigation of the Credit Demand Schedule“, Journal of Post Keynesian Economics, DOI: 10.1080/01603477.2017.1338967.

Dées S. and Güntner, J. (2016), “Forecasting Inflation across Euro Area Countries and Sectors: A Panel VAR Approach”, Journal of Forecasting, 36 (4), pp. 431-453.

Dixon A.D. (2008), “The Rise of Pension Fund Capitalism in Europe: An Unseen Revolution?”, New Political Economy, 13 (3), pp. 249-270.

Dixon A.D. and Sorsa V. (2009), “Institutional Change and the Financialisation of Pensions in Europe”, Competition & Change, 13 (4), pp. 347-367.

Dögüs I. (2017), “Rising Wage Dispersion between White-Collar and Blue-Collar Workers and Market Concentration: The Case of the USA, 1966-2011”, ZÖSS Discussion Paper, n. 62, Hamburg: Zentrum für Ökonomische und Soziologische Studien, University of Hamburg; available at: https://www.wiso.uni-hamburg.de/fachbereich-sozoek/professuren/heise/zoess/publikationen/dp62.pdf

Dögüs I. (2018), “A Minskyan Critique of Financial Constraint Approach to Financialisation”, Review of Keynesian Economics, 6 (2), pp. 202-220.

Dünhaupt P. (2014), “An Empirical Assessment of the Contribution of Financialization and Corporate Governance to the Rise in Income Inequality”, IPE Working Paper, n. 41/2014, Berlin: Institute for International Political Economy; available at: http://www.ipe-berlin.org/fileadmin/downloads/working_paper/ipe_working_ paper_41

Engelen E. (2003), “The Logic of Funding European Pension Restructuring and the Dangers of Financialisation”, Environment and Planning A, 35 (8), pp. 1357-1372.

Fontana R., Rodriguez-Gil A. and Sawyer M. (2016), “Financialization, Wage Inequality and Stagnation”, paper presented at the 28th Annual European Association for Evolutionary Political Economy (EAEPE) Conference, Manchester Business Schoool, Manchester (UK), 3-5 November.

Ganßmann H. (2013), “Financial Markets, Welfare States and the Great Recession”, Working Paper, n. 4/2013, Leipzig: Institut für Soziologie, University of Leipzig, available at: http://research.uni-leipzig.de/leus/wp-content/uploads/2013-04-Gan%C3%9Fmann-Financial-markets-welfare-states-and-the-Great-Recession1.pdf

Green F. (1991), “Institutional and Other Unconventional Theories of Saving”, Journal of Economic Issues, 25 (1), pp. 93-113.

Greenwood-Nimmo M. and Tarassow A. (2013), “A Macroeconometric Assessment of Minsky’s Financial Instability Hypothesis”, DEP (Socioeconomics) Discussion Papers, n. 6/2013, Macroeconomics and Finance Series, University of Hamburg; available at: https://www.wiso.uni-hamburg.de/repec/hepdoc/macppr_6_2013.pdf

Guðmundsson B.R. (2016), “Financialisation and Financial Crisis in Iceland”, European Journal of Economic Policies: Intervention, 13 (3), pp. 292-322.

Guttmann, R. (2017), “Financialization Revisited: The Rise and Fall of Finance-Led Capitalism”, Economia e Sociedade, Campinas, 26 (special issue), pp. 857-877.

Hein E. (2010), “Shareholder Value Orientation, Distribution and Growth: Short- and Medium-Run Effects in a Kaleckian Model”, Metroeconomica, 61 (2), pp. 302-332.

Herr H. and Ruoff B. (2014), “Wage Dispersion as Key Factor for Changing Personal Income Distribution”, Journal of Self-Governance and Management Economics, 2 (3), pp. 28-71.

Jackson G. (2010), “Understanding Corporate Governance in the United States. An Historical and Theoretical Reassessment”, IMK Hans Böckler Stiftung Arbeitspapier, n. 223, Düsseldorf: Hans Böckler Stiftung.

Kaldor N. (1955-1956), “Alternative Theories of Distribution”, Review of Economic Studies, 23 (2), pp. 83-100.

Keynes J.M. (1936), The General Theory of Employment, Interest and Money, New York: Macmillan.

Lazonick W. and O’Sullivan M. (2000), “Maximizing Shareholder Value: A New Ideology for Corporate Governance”, Economy and Society, 29 (1), pp. 13-35.

McCarthy M.A., Sorsa V. and van der Zwan N. (2016), “Investment Preferences and Patient Capital: Financing, Governance, and Regulation in Pension Fund Capitalism”, Socio-Economic Review, 14 (4), pp. 751-769.

Minsky H.P. (1986), Stabilizing an Unstable Economy, New Haven (CT): Yale University Press.

Natali D. (2008), “Occupational Pensions in Europe: Trojan Horse of Financialization?”, Social Policy Administration, 52 (2), pp. 449-462.

Nikiforos M. (2016), “A Non-Behavioral Theory of Saving”, Journal of Post Keynesian Economics, 39 (4), pp. 562-592.

Palley T.I. (2008), “The Relative Income Theory of Consumption: A Synthetic Keynes-Duesenberry-Friedman Model”, PERI Working Paper, n. 170, Amherst: Political Economy Research Institute, University of Massachusetts Amherst.

Palley T.I. (2015), “The Middle Class in Macroeconomics and Growth Theory: A Three Class Neo-Kaleckian-Goodwin Model”, Cambridge Journal of Economics, 39 (1), pp. 221-243.

Peralta, N.Á. and García B.M. (2008), “Financial Globalization and Labor: Employee Shareholding or Labor Regression?”, PERI Working Papers Working Paper, n. 172, Amherst: Political Economy Research Institute, University of Massachusetts Amherst.

Perugini C., Hölscher J. and Collie S. (2016), “Inequality, Credit and Financial Crises”, Cambridge Journal of Economics, 40 (1), pp. 227-257.

Skott P. (2011), “Increasing Inequality and Financial Instability”, Economics Department Working Paper Series, n. 128, Amherst: Department of Economics, University of Massachusetts Amherst.

Steindl J. (1952), Maturity and Stagnation in American Capitalism, Oxford: Basil Blackwell.

Steindl J. (1990), Economic Papers 1941-88, New York: St. Martin’s Press.

Tarassow A. (2010), “The Empirical Relevance of Goodwin’s Cycle Model for the US Economy”, PRAG Discussion Paper, n. 5, Hamburg: Profitratenanalysegruppe (PRAG) am Zentrum für Ökonomische und Soziologische Studien (ZÖSS), University of Hamburg; available at https://www.wiso.uni-hamburg.de/fachbereich-sozoek/professuren/heise/zoess/forschung/forschungsfelder/forschungsfeld-iii-bildung-und-weiterbildung/prag-05.pdf

Toporowski J. (1993), The Economics of Financial Markets and the 1987 Crash, Aldershot: Edward Elgar.

Toporowski J. (2000), The End of Finance: Capital Market Inflation, Financial Derivatives, and Pension Fund Capitalism, London: Routledge.

Toporowski J. (2008a), “Excess Capital and Liquidity Management”, Levy Economics Institute Working Paper, n. 549, Annandale-on-Hudson (NY): Levy Economics Institute of Bard College.

Toporowski J. (2008b), “The Economics and Culture of Financialisation”, Department of Economics Working Paper, n. 158, London: School of Oriental and African Studies, University of London; available at: https://www.soas.ac.uk/economics/research/workingpapers/file43195.pdf

Toporowski J. (2010), “The Wisdom of Property and the Politics of the Middle Classes”, Monthly Review, 62 (4), pp. 10-15.

Toporowski J. (2014). “Debt, Class and Asset Inflation”, in Bellofiore R. and Vertova G. (eds.), The Great Recession and the Contradictions of Contemporary Capitalism, Cheltenham (UK) and Northamton (MA): Edward Elgar, pp 100-111.

Wildauer R. (2016), “Determinants of US Household Debt: New Evidence from the SCF”, PSKG Working Paper, n. 1608, Leeds: Post Keynesian Economics Study Group, University of Leeds.

DOI: http://dx.doi.org/10.13133/2037-3643_71.284_3


  • There are currently no refbacks.

Copyright (c) 2018 Ilhan Dögüs

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.



Sponsored by   

ISSN 2037-3643

Reg. Tribunale di Roma n.377/2009 del 19/11/2009