The Impact Of Financialization On Income Inequality In United States

Economic financialization refers to the process that the scale of financial sector is expanding,the financial assets of non-financial sector are increasing,and the market position of relevant institutions in the financial field is improving.Since the 1980s,with the implementation of Neo liberal policies in the western developed capitalist countries represented by the United States,the financial sector has been expanding all over the world,and the degree of economic financialization has been deepening.At the same time with the economic financialization,the income inequality in various countries is increasing,the proportion of low-income people’s income in the total social income is decreasing,and the wealth of high-income people is increasing rapidly.Many scholars have studied the phenomenon of increasing income inequality in the United States in recent years,but mainly from the aspects of foreign trade,scientific and technological development,social factors and so on.There are relatively few literatures on income inequality from the perspective of financialization,and there is no consistent conclusion.This paper uses the U.S.macroeconomic data from 1960 to 2018 to measure economic financialization from three dimensions:the development level of credit market,the development level of stock market and the financialization degree of nonfinancial enterprises,and uses VECM model to study the impact of the three on income inequality.In order to explore the influence mechanism of economic financialization on income inequality,this paper classifies the income groups according to the proportion of income,and divides them into four groups:the first 1%,the first 10%,the middle 40%and the last 50%,and further analyzes the influence difference of economic financialization on the above income groups.The results show that:(1)The development of American credit market has aggravated income inequality.For different income groups,the top 1%and top 10%of income groups can get higher income through the development of credit market,while the income proportion of the middle 40%and the last 50%of income groups decreases significantly with the development of credit market.(2)The development of stock market will aggravate income inequality.For different income groups,the top 10%of the income group will benefit from the development of the stock market,while the middle-income group and low-income group will not benefit from the development of the stock market.(3)The financialization of non-financial enterprises will aggravate income inequality,which will significantly reduce the relative income of the last 50%of the income group.The top 1%and top 10%of the income group will benefit significantly from the financialization of non-financial enterprises,while the income of the middle 40%of the income group is not significantly affected by this process.Finally,through the analysis of the empirical results,this paper draws some basic conclusions and enlightenment,and puts forward the corresponding policy suggestions.