4 emphasise the role of effective demand in determining output, income and employment. Consequently, functional income distribution is governed by consumption of workers and capitalists and, more importantly, by the propensity to invest which is driven by aggregate demand and business expectations, i.e. the animal spirits of the private investors (Kaldor, 1955). Most heterodox authors accept this analysis but augment the emphasis on animal spirits by additional factors governing the balance of power between employers and employees as suggested my Marxist or Institutionalist economists. Technology might affect the contributions of the factors of production but technological change itself is an endogenous outcome of conflict in the labour process. Wages are negotiated between employers and employees and are therefore subject to social norms and relative bargaining power. Consequently scholars in this tradition have offered a more thorough analysis of the determinants of bargaining power. Marxist economists emphasise the sphere of production as the source of surplus and the core determinant of income distribution. Economists working in a post-Keynesian or Kaleckian tradition start directly from the assumption of oligopolistic markets and focus on the sphere of circulation. They emphasise the degree of monopoly in a market, which is determined by the degree of competition between firms, union power and, in a more recent interpretation of the literature by the strength of the financial sector (Kalecki, 1954; Hein, 2015). In the following, we refer to the Marxist, Institutionalist and post- Keynesian/Kaleckian analysis as the Political Economy approach. Although the New Keynesian and the Political Economy approach to income distribution start from different assumptions, both arrive at a bargaining framework to analyse distribution of income, at least in the more recent studies in the New Keynesian tradition. The difference is rather that the New Keynesian approach discusses the effects in a rather technical manner driven by a production function approach, while studies following the bargaining approach would always relate the developments to changes in bargaining power. For example, New Keynesian scholars discuss how globalisation changed the factor supplies or costs of intermediate products, and how this technically affects parameters in the equation for the wage share. In contrast, political economists rather look at how globalisation and financialisation increase the fall-back options of capital while decreasing the fall-back options of labour and thereby change the relative bargaining power between the two factors. Both the mainstream studies and the research in the tradition of political economy find substantial negative effects of globalisation on the wage share. IMF (2007) and EC