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North-South Globalization and Inequality

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  • Joël Hellier

    ()
    (EQUIPPE, Univ. of Lille 1, and LEMNA, Univ. of Nantes)

Abstract

To analyse the globalization-inequality relationship, we extend the North-South HOS model by assuming (i) that the size of the South (emerging countries) increases over time and that the North (advanced countries) and the South never stand simultaneously inside the diversification cone, (ii) several northern and southern countries with different skill endowments, and (iii) North-South technological differences, productivity catching up and technological transfers. The model generates three phases of globalization, corresponding to different production patterns and to specific changes in inequality in the North and in the South. In the North, inequality continuously increases and unskilled workers purchasing power continuously decreases during the first phase of globalization, and inequality diverges across countries. In the South, very different profiles in terms of inequality dynamics are possible, depending on the country’s skill endowment and on the its technological gap with the North. Unlike the traditional North-South HOS approach, the model predictions are consistent with observed facts.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2012-273.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 273.

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Length: 21 pages
Date of creation: Oct 2012
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2012-273

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Keywords: globalization; inequality; North-South trade; technology.;

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  12. Pissarides, Christopher A, 1997. "Learning by Trading and the Returns to Human Capital in Developing Countries," World Bank Economic Review, World Bank Group, vol. 11(1), pages 17-32, January.
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