Financial Ownership in the Automotive Industry: Impact on the Firm-Level Wage Share.

Abstract:

The purpose of this study is to investigate the relationship between the financialisation of
the economy and the growing inequality in the functional distribution of income. In order to
do so, we proceed with a firm-level analysis of the global automotive sector.
The peculiarity of the present research lies in the definition of financialisation. In fact, we
consider financialised a company whose ownership is not in the hands of an industrial corporation
but of a financial fund. What is therefore relevant is the ownership structure, and
what we study is the impact that a change in this structure has on the distribution of added
value. Namely, through a firm-level analysis, we investigate how the ownership structure of
automotive companies impacts the wage share.
This is done by using firm-level data on the economic-financial situation of the entire
NACE 29 sector (retrievable on the Orbis Bureau van Dijk database) for the time window
between 2012 and 2020. Further data, proxies for the level of industrial relations and globalization
(respectively at national and sectoral level), are also considered. Additionally, we
discriminate for final assemblers and component producers and we account for geographical
regions’ dummies. Thus, we construct an unbalanced panel and we estimate a fixed-effect
model and a panel quantile regression. Finally, to remove possible confounding factors, we
use the propensity score method and through the inverse probability weighting we re-estimate
both models.
Our analysis shows that estimating with the inverse probability weighting results in a
negative impact of the change in the ownership structure on the wage share, thus supporting
our starting hypothesis.

Keywords — Financialization, Wage share, Functional income inequalities, Automotive sector, Industrial
relations.
JEL Codes — D33, E25, E44, G20, G32, J30, L62.