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Globalization and income inequality: A panel data econometric approach for the EU27 countries

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  • Asteriou, Dimitrios
  • Dimelis, Sophia
  • Moudatsou, Argiro

Abstract

This paper investigates the relationship between income inequality and globalization, measured with both trade and financial variables. We estimate an econometric model using appropriate panel data techniques for the EU-27 countries over the period 1995–2009. The analysis is also performed at subgroups of countries within the EU27, such as the Core, Periphery, High Technology, and the New EU Member countries. Overall, the results suggest that trade openness exerts an equalizing effect, while financial globalization through FDI, capital account openness and stock market capitalization has been the driving force of inequality in the EU-27 since 1995. The highest contribution to inequality stems from FDI. Although the trade impact remained robust, disparities were observed in the financial globalization effects within a certain group or among country groups. The recent financial crisis led to a significant rise in inequality only in the EU-periphery and the New Member states. The impact from the other control variables was either minor or insignificant.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecmode:v:36:y:2014:i:c:p:592-599
    DOI: 10.1016/j.econmod.2013.09.051
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kaisa Alavuotunki, & Jukka Pirttilä2, 2015. "The consequences of the value-added tax on inequality," WIDER Working Paper Series 111, World Institute for Development Economic Research (UNU-WIDER).
    2. repec:voj:journl:v:63:y:2016:i:2:p:231-258 is not listed on IDEAS
    3. Meltem Ucal & Alfred Albert Haug & Mehmet Hüseyin Bilgin, 2016. "Income inequality and FDI: evidence with Turkish data," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 1030-1045, March.
    4. Kaisa Alavuotunki & Mika Haapanen & Jukka Pirttilä, 2017. "The Consequences of the Value-Added Tax on Inequality," CESifo Working Paper Series 6318, CESifo Group Munich.
    5. repec:lde:journl:y:2017:i:87:p:9-33 is not listed on IDEAS
    6. repec:eee:forpol:v:90:y:2018:i:c:p:180-190 is not listed on IDEAS
    7. repec:eco:journ1:2018-01-29 is not listed on IDEAS
    8. Ahmad, Mahyudin, 2016. "Middle income trap and income inequality: Empirical evidence on the distributional effect of economic liberalization and political regime," MPRA Paper 76437, University Library of Munich, Germany.
    9. repec:eee:ecmode:v:70:y:2018:i:c:p:40-55 is not listed on IDEAS
    10. repec:eee:ecmode:v:65:y:2017:i:c:p:119-128 is not listed on IDEAS
    11. repec:col:000174:015706 is not listed on IDEAS
    12. Lim, G.C. & McNelis, Paul D., 2016. "Income growth and inequality: The threshold effects of trade and financial openness," Economic Modelling, Elsevier, vol. 58(C), pages 403-412.
    13. Parcero, Osiris J. & Papyrakis, Elissaios, 2016. "Income inequality and the oil resource curse," Resource and Energy Economics, Elsevier, vol. 45(C), pages 159-177.
    14. Chambers, Dustin & Dhongde, Shatakshee, 2016. "Convergence in income distributions: Evidence from a panel of countries," Economic Modelling, Elsevier, vol. 59(C), pages 262-270.

    More about this item

    Keywords

    Income inequalities; Panel data; Financial globalization; Trade; FDI;

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • F10 - International Economics - - Trade - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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