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Globalization and Income Inequality: A Panel Data Analysis of 68 Countries

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  • Atif, Syed Muhammad
  • Srivastav, Mudit
  • Sauytbekova, Moldir
  • Arachchige, Udeni Kathri

Abstract

The causal effect of globalisation on income inequality is an issue of significant academic interest. On the one hand globalisation is considered to promote global economic growth and social progress, while on the other; it is blamed for growing income inequality and environmental degradation, causing social degeneration and difficulty of competition. The objective of the study is to determine the direction of impact of globalization on income distribution. This study hypothesises that increased globalisation worsens income inequality, and vice versa. This hypothesis is investigated using panel data econometric techniques to examine income inequality index and the index of globalization for panel data of 68 developing countries over the period of 1990-2010. The analysis shows that an increase in globalisation (represented by an increase in the KOF coefficient) leads to an increase in the level of income inequality. It is worth noting, however, that this analysis also suffers from several limitations. It is possible perhaps a simple, overarching relationship does not exist. Rather it is possible that the impact of globalisation on income distribution varies between nations, depending on the structures and institutions that are in place in each country.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42385.

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Date of creation: 28 Oct 2012
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Handle: RePEc:pra:mprapa:42385

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Keywords: Globalization; Income Inequality; Panel Data;

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  1. Atif, Syed Muhammad & Endres, James & Macdonald, James, 2012. "Broadband Infrastructure and Economic Growth: A Panel Data Analysis of OECD Countries," EconStor Preprints 65419, ZBW - German National Library of Economics.
  2. Edwards, Sebastian, 1997. "Trade Policy, Growth, and Income Distribution," American Economic Review, American Economic Association, vol. 87(2), pages 205-10, May.
  3. Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
  4. Atif, Syed Muhammad & Siddiqi, Muhammad Wasif, 2010. "The Electricity Consumption and Economic Growth Nexus in Pakistan: A New Evidence," EconStor Preprints 65688, ZBW - German National Library of Economics.
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