Chinese Journal of Sociology ›› 2025, Vol. 45 ›› Issue (3): 180-207.

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The Relationship Between Financialization and Internal Income Gap in Non-Financial Enterprises: An Analysis of the Inequality Effects on Social Development

Bin ZHU, Yijun TIAN()   

  • Online:2025-05-20 Published:2025-06-19
  • About author:ZHU Bin, Center for Studies of Sociological Theory & Method, and Research Institute for Social Work and Development, Renmin University of China
    TIAN Yijun, School of Social Research, Renmin University of China, E-mail: tianyijun7@ruc.edu.cn
  • Supported by:
    the National Social Science Fund of China-Youth Project "Research on the Changes of Income Distribution Gap and Common Prosperity in China from the Perspective of Financialization"(21CSH013)

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Abstract:

Financial development is not only an important driving force for economic growth, but also a significant force in shaping social structure. In recent years, with the continuous acceleration of financialization in China, financial factors have increasingly permeated multiple aspects of business operations and social governance, triggering a great deal of concern in the academic community about the possible structural consequences of financialization. Combining the perspectives of financial development and power structure, this paper constructs a theoretical framework for analyzing the inequality effects of financial development and proposes three potential inequality effects: maximising the inequality-maintaining effect, effectively expanding inequality effect and effectively reducing inequality effect. Using data from A-share listed companies between 2007 and 2022, this paper examines the impact of financialization of non-financial enterprises on the intra-firm income gap. The study finds that the financialization of non-financial enterprises has significantly widened the income gap between management and ordinary employees. Specifically, financialization has deepened the existing power structure within enterprises. On the one hand, it inhibits the expansion of real business by directing investment to the financial sector, which in turn weakens the bargaining power of employees and their room for pay growth; on the other hand, it prompts enterprises to adopt incentive mechanisms oriented towards maximizing shareholder value, which enhances the management's control and pay bargaining power, and enables it to obtain a larger share of resource allocation. Furthermore, although corporate financialization improves business performance to a certain extent, new profits are mainly distributed centrally to management, with limited benefits shared by ordinary employees. This finding supports the assumption of effectively expanding inequality and reveals the latent distribution risks and social inequality amplification mechanisms of financialization under the current corporate governance structure.

Key words: corporate financialization, income inequality, bargaining power