Abstract
Income inequality has risen in most OECD countries since the 1970s. In the same period, the economy has become more financialized both as an accumulative property and as a corporate strategy. Meanwhile, labour unions have become less significant in industrial relations and political decision-making. In this thesis, I study whether there might be a connection between these developments. The research question sounds: To what degree does financialization affect income inequality, and does this effect decrease under conditions of higher labour union strength? I use power resources theory to hypothesize on how labour unions and financialization affect income inequality. The theory assumes that power differences between social classes allows income to be concentrated among capital owners and labour. Further, I explain how financialization ought to benefit capital owners, while union organization ought to benefit labour. To investigate the research question, I apply a fixed effects model and study a sample of 27 OECD nations over a period from 1975 to 2014. I find that financialization conceptualized in its broadest form, as an accumulative property, does increase income inequality to some degree. The more narrow conceptualisation, as a corporate strategy, is not directly linked to income inequality. I also find that labour union strength often reduces the effect that financialization has on income inequality. Thus, my study finds that although financialization to some degree concentrates income among a few, countries with strong labour unions are less affected by this development.