Income distribution, banks and managers: A linear joint-production model with financial assets

Abstract

The aim of this paper is to elaborate a Sraffian production model with banks, corporations, shareholders and managers to argue that the expansion of the financial sector contributes to the decrease of the wage-share. The model introduces joint production to take into account fixed capital and corporate firms and provides rigorous foundations for the description of an economy characterised by unbalanced growth with the financial sector growing at the highest rates. Besides demonstrating that the analysis generates non-negative solutions for prices and quantities, the paper concludes that, if workers' debt grows faster than the rest of the economy, the wage share diminishes and that the greater the size of the dividends that corporate companies decide to distribute, the larger the reductions in the wage share.