Financialization And Income Inequality

Since the 1980 s,the world economy has entered a period of rapid development.Per capita GDP has increased from $4,308 in 1980 to $15,117 in 2018,an increase of 2.5 times.At the same time as rapid economic development,residents' income has steadily increased,but the labor share continues to decline.The gap between the rich and the poor in society has been expanding,and long-term income inequality will have a negative impact on economic growth and social stability.China has also evolved from a middle-income inequality country to one of the countries with the largest income gap in the world.Long-term income inequality will pose a major hidden danger to economic growth and social stability.Scholars have done a full research on income inequality from the perspectives of development economics and welfare economics.However,an economic phenomenon has been neglected for a long time: income inequality and the rapid expansion of economic financialization at the same time.Under the influence of the wave of deregulation,a large number of financial innovations have emerged,the strength of the financial sector has continued to grow,and the degree of economic financialization has even become an important symbol of countries,especially developed economies.Finance,as the lifeblood of the national economy,has a close relationship with economic growth,but we must realize that finance itself is also a distribution system that has a strong income distribution effect on both resources and wealth.So does financialization really affect income inequality? In recent years,scholars have also conducted a lot of academic research between them,but there are still many opinions on the relationship between them,and three different research results have been formed on,the harmful theory,the beneficial theory,and the nonlinear relationship,and most of the research is concentrated Theoretical and macro level studies lack micro evidence.Therefore,it is very important and valuable to conduct a comprehensive assessment of financialization and income inequality from a more diverse perspective.Based on this,this paper tries to from the macro and micro level,clarify financialization in different environment and conditions,and the relationship between income inequality,through study related achievements at home and abroad,the integration of theoretical model,analyzed the mechanism of action of income inequality on financialization,then put forward the research hypothesis,on the basis of using real data to construct an empirical model,and to estimate and test,this article research conclusion is obtained.First,at the macro level,this paper uses relevant data of the global economy from 2004 to 2018 to construct the panel threshold model with the degree of financialization as the threshold variable.It is found that there is a non-linear relationship between financialization and income inequality.In the early stage of financialization,with the increase of financialization,income inequality will be reduced.With the deepening of financialization,the positive effect of finance on income inequality will disappear.In addition,the impact of financialization on income inequality varies significantly among economies at different levels of development.In developed countries,financialization increases income inequality,while in developing countries,it improves income inequality.Secondly,this paper used the data of a-share listed companies in Shanghai and Shenzhen from 2007 to 2018 to reconstruct the model and parameter estimation system from the micro level.It is found that there is a non-linear decreasing relationship between financialization and income inequality,that is,financialization intensifies income inequality,but with the continuous development of financialization,this adverse effect will gradually weaken.In addition,the relationship between the two is quite different in different industries,but the difference between different enterprises is not obvious.Finally,based on the above research conclusion,this article from improving the financial system and improve the income distribution system and other aspects put forward some feasible Suggestions,in order from the academic level to further improve on financialization and income inequality related to areas of research,and for the related decision departments system to improve the income inequality status to provide some experience and technical support.