The wages of investor power: shareholder exploitation in Europe

Abstract Exploitation, or the ability of property owners to gain at worker’s expense, is a classic sociological explanation for inequality. However, it is a difficult process to identify and empirically show with most data sources. Using data on European corporations from 1995 to 2020, we ask if shareholder gains come at the expense of employee earnings in a process we call “shareholder exploitation.” Panel estimation results confirm a robust antagonistic pattern with shareholders experiencing cumulative advantages relative to employees over this period. We further explore moderating mechanisms in this process. These results show globalization effects and the importance of the profit rate over time. Antagonism between shareholders and workers increases when profitability declines but attenuates when profitability increases and workers can claim more of the surplus. By using ideas from critical political economy, this paper has important implications for the study of inequality.