Firm Ownership Structures and Inequality: The Impact on Household Income and Wealth Inequality

The research explores the complex relationship between firm inequality and household wealth and income inequality. Recent studies highlight growing disparities among US firms in productivity, size, profitability, markups, and wages. The decline in business dynamism is associated with various trends, such as stagnating real wages and falling productivity growth. The causes of these trends are debated, with technological change, globalization, and institutional changes in labor markets among the proposed explanations. The aim is to contribute to this research by focusing on the UK economy and exploring the relationship between ownership structures and firm inequality. The shift from domestic long-term institutional investors to global short-term asset management firms in the UK is suggested as a potential factor influencing business trends and rising inequality. Hence, this research will consider ownership structures such as the shareholder-capitalist model, family-owned businesses, private corporations, and co-operatives, addressing questions about their impact on business dynamism, firm inequality, employee outcomes, financing, decision-making processes, and technology adoption. Studying the UK economy is important on two fronts: 1) There has been a rise in overall UK inequality; 2) By contrasting results with those that use US firm level data, my research can help determine whether declining business dynamism is specific to the US or whether it is a cross-country phenomenon. The plan is to create a comprehensive dataset by combining firm-level data from Bureau van Dijk's Orbis database with proprietary financial data from various sources. The research findings have implications for corporate governance, policy formulation, and strategic decision-making, potentially informing interventions and reforms to address income inequality and inform theoretical models such as heterogeneous agent models.