An empirical analysis of the impact of financialisation on the rate of profit for the US (1955-2019)

The aim of this paper is to investigate the relationship between financialisation and functional income distribution. To this end, we analyse empirically the relationship between financialisation, the real wage level, and the rate of profit in the US (1955-2019) by applying SVAR modelling. According to our results, while an increase in financialisation leads to changes in the rate of profit of ambiguous sign and unclear statistical significance, financialisation exhibits a clear-cut, negative, and persistent negative effect on the real wage level. We conclude for a reconsideration of the role of financialisation in shaping functional income distribution, as it appears to directly contribute to restrain real wage levels rather than directly impacting profitability. We also argue that these considerations prompt a reflection on the way financialisation affects industrial relations and labour market dynamics, suggesting new avenues of research.