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Rising Income Inequality

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Author Info

  • Chris Papageorgiou
  • Subir Lall
  • Florence Jaumotte

Abstract

We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. We find technological progress as having a greater impact than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization-and foreign direct investment in particular-is associated with an increase. A key finding is that both globalization and technological changes increase the returns on human capital, underscoring the importance of education and training in both developed and developing countries in addressing rising inequality.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 08/185.

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Length: 36
Date of creation: 01 Jul 2008
Date of revision:
Handle: RePEc:imf:imfwpa:08/185

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Keywords: Income distribution; Foreign direct investment; Human capital; Economic models; Trade models; globalization; financial globalization; tariff rate; trade liberalization; trade openness; tariff rates; agricultural exports; international trade; skilled workers; average tariff; weighted tariff; political economy; average tariff rate; export growth; world economy; trade partners; trade integration; per capita income; trade data; average tariff rates; tariff reduction; international economic relations; economic outcomes; world trade; benefits from globalization; global shocks; protectionist pressures; oil imports; economic liberalization; financial integration; output volatility; import value; increasing trade; export prospects; tariff liberalization; increased trade; fixed capital formation; intermediate inputs; process of development; trading system; foreign assets; patterns of trade; tariff revenue; global trading; globalization of trade; tariff reductions; wage differentials; reduction in tariffs; benefits of globalization; terms of trade; evidence of convergence;

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References

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Citations

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Cited by:
  1. Areendam Chanda & Beatrice Farkas, 2009. "Technology-Skill Complementarity and International TFP Differences," DEGIT Conference Papers c014_028, DEGIT, Dynamics, Economic Growth, and International Trade.
  2. Rana Ejaz Ali Khan & Nadia Bashir, 2011. "Trade Liberalization, Poverty and Inequality Nexus: A Case Study of India," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 114-119, September.
  3. Ju, Jiandong & Shi , Kang & Wei , Shang-Jin, 2013. "Trade reforms and current account imbalances," BOFIT Discussion Papers 25/2013, Bank of Finland, Institute for Economies in Transition.
  4. Dollar, David & Kleineberg, Tatjana & Kraay, Aart, 2013. "Growth still is good for the poor," Policy Research Working Paper Series 6568, The World Bank.
  5. Chao-Hsi Huang & Kai-Fang Teng & Pan-Long Tsai, 2010. "Inward and outward foreign direct investment and poverty: East Asia vs. Latin America," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(4), pages 763-779, December.
  6. Cysne, Rubens Penha & Turchick, David, 2012. "Equilibrium unemployment-inequality correlation," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 454-469.
  7. Parisa SAMIMI & Guan Choo LIM & Abdul Aziz BUANG, 2011. "Globalization Measurement: Notes on Common Globalization Indexes," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 1(7), pages 20, December.
  8. Caroline DAYMON, 2012. "Ouverture Commerciale, Inégalités De Revenu Et Répartition Salariale Dans Les Pays Du Sud Et De L’Est De La Méditerranée," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 81-98.
  9. Beatrice Farkas, 2012. "Absorptive Capacities and the Impact of FDI on Economic Growth," Discussion Papers of DIW Berlin 1202, DIW Berlin, German Institute for Economic Research.
  10. Oscar Afonso, 2012. "Scale-independent North-South trade effects on the technological-knowledge bias and on wage inequality," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(1), pages 181-207, April.
  11. Ravi Balakrishnan & Chad Steinberg & Murtaza H. Syed, 2013. "The Elusive Quest for Inclusive Growth," IMF Working Papers 13/152, International Monetary Fund.
  12. Nilanjan Banik, 2009. "Trade and Social Development: The case of Asia," Working Papers 6809, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
  13. Rafal Kierzenkowski & Isabell Koske, 2012. "Less Income Inequality and More Growth – Are they Compatible? Part 8. The Drivers of Labour Income Inequality – A Literature Review," OECD Economics Department Working Papers 931, OECD Publishing.
  14. Il Houng Lee & Murtaza H. Syed & Xin Wang, 2013. "Two Sides of the Same Coin? Rebalancing and Inclusive Growth in China," IMF Working Papers 13/185, International Monetary Fund.
  15. repec:cmj:journl:y:2013:i:27:stetm is not listed on IDEAS
  16. Robert Anderton & Paul Hiebert, . "The Impact of Globalisation on the Euro Area Macroeconomy," Discussion Papers 09/14, University of Nottingham, GEP.
  17. Antonio David & Martin Petri, 2013. "Inclusive Growth and the Incidence of Fiscal Policy in Mauritius," IMF Working Papers 13/116, International Monetary Fund.
  18. Asteriou, Dimitrios & Dimelis, Sophia & Moudatsou, Argiro, 2014. "Globalization and income inequality: A panel data econometric approach for the EU27 countries," Economic Modelling, Elsevier, vol. 36(C), pages 592-599.

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