chapter  15
Fairness, Financial Rents, and Conflict
Pages 18

The inverse relation between financial rents and the labor share is demonstrated by a mass of evidence. Palley (2007), in particular, shows that the “rentier share” rose dramatically in the period between the 1970s and the 1990s, and that it generated increasing income inequality and a decline in the rate of growth. OECD reports that the “rentier income share” in the USA rose from about 15 percent in the 1960s to about 35 percent in the 1990s, and that it continued to rise from 1995 to 2000 reaching about 45 percent. As regards real wages and employment, the IMF reports that, in the case of the USA, there was a fall of about 10 percent from the 1970s to the 1990s, 6 percent of which corresponds to the fall from the 1980s to the 1990s. Hein and Truger (2007: 225) find that “Moderate wage increases were accompanied by a decline in the labor income share, both in the Euro area and in the USA” and that, in particular, the labor share income in the Euro area passed from about 62 percent in 1992 to about 57 percent in 2005, while – in the USA – it started from over 63 percent to reach 62 percent in 2005.