Abstract
The paper sets out a theoretical model linking stock market financial risk to labour market
conditions, including labour intensity and the risk arising from the specification of labour contracts.
A value added analysis is conducted combining national and firm level accounts data to examine
the relationship between the share of value and the share of risk, contrasting manufacturing and
service industries. In conjunction with a firm level analysis, empirical support for the model is
established showing rational trade-offs between the risk and value appropriations of investors and
employees and a less rational accumulation of structured debt finance as the UK economy has
shifted from manufacturing to services in the last 30 years. The shift to services, flexibility and
deregulation has tended to promote labour intensity, inflexibility of cost structures, and, as a
consequence greater financial risk.
| Original language | English |
|---|---|
| Publisher | Department of Management Studies, University of York |
| Publication status | Published - Aug 2009 |
Keywords
- Operating
- financial
- leverage
- risk
- labour
- flexible