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A revisit to the relationship between globalization and income inequality: are levels of development really paramount?

Author

Listed:
  • Volkan Han

    (Nevşehir Hacı Bektaş Veli University)

  • Oguz Ocal

    (Kayseri University)

  • Alper Aslan

    (Erciyes University)

Abstract

The European Union is an important example of economic integration and regional cooperation. The expectation from the EU is to ensure a more equitable distribution of income among the members of the union. However, especially after 1980, inequality raises were seen within income groups and new members. It is aimed to determine the effects of the important determinants of globalization on the increasing inequality in the EU-28 countries by this study. The aim of this study is to determine the effects of important determinants of globalization on increasing income inequality in EU-28 countries. In the study, using data from 1995 to 2018, the relationship between globalization and income inequality was examined by panel quantile analysis method. The findings of the analysis helped us to see the effect of inequality variables within the various degrees of inequalities. It is aimed to contribute to the literature with the panel quantile approach, which we applied by examining the possible effects at different levels of development with different quantiles. In our study, we found that both trade openness and stock market capitalization reduce poverty at all levels of development. While R&D expenditure has a positive effect on medium and high levels of inequality, FDI at low and medium levels of inequality has a lowering effect on inequality. Finally, the effect of economic growth on income distribution increases inequality in all quantiles except the 90th. However, this effect of economic growth diminishes as the level of inequality increases and the GDP has an equalizing effect in the highest inequality countries.

Suggested Citation

  • Volkan Han & Oguz Ocal & Alper Aslan, 2023. "A revisit to the relationship between globalization and income inequality: are levels of development really paramount?," Quality & Quantity: International Journal of Methodology, Springer, vol. 57(1), pages 973-990, February.
    • Handle: RePEc:spr:qualqt:v:57:y:2023:i:1:d:10.1007_s11135-022-01402-z
    DOI: 10.1007/s11135-022-01402-z
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    More about this item

    Keywords

    Globalization; Income inequality; Economic growth; Technology advances; Quantile regression;
    All these keywords.

    JEL classification:

    • F6 - International Economics - - Economic Impacts of Globalization
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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