The paper analyzes the possible distributional consequences of the global crisis based on the lessons of the past crises experiences. The decline in the labor share across the globe has been a major factor that led to the current global crisis. What we are going through is a crisis of distribution, and similarly the policy reactions to the crisis are part of a distributional struggle. The paper presents the effects of the former crises in the developing countries and in Japan on income distribution, wages, and unemployment. This comparison is important not only because it compares developing vs. developed country cases, but also because it highlights the differences of the currency crises vs. domestic financial crises regarding the distributional consequences. However, despite differences, the cumulative effect is in both cases a dramatic pro-capital redistribution. Building on these lessons, the paper discusses the possible different effects of the current global crisis in the developed countries, Eastern Europe, and developing countries, and concludes with policy alternatives to avoid the socialization of the costs of the crisis.
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Özlem Onaran, Vienna University of Economics and Business. The text above is the abstract of Özlem Onaran’s paper “From the Crisis of Distribution to the Distribution of the Costs of the Crisis: What Can We Learn from Previous Crises about the Effects of the Financial Crisis on Labor Share?”; it is reproduced here for educational purposes. The paper was originally prepared for presentation at the Global Labor University Conference, Mumbai, February 22-24, 2009; and the full text of the paper is available (in PDF) at the Web site of the Political Economy Research Institute as well as that of the Global Labor University.