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Globalization and Inequality: Where do we stand?

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  • Nathalie Chusseau

    (EQUIPPE, University of Lille 1)

  • Joël Hellier

    () (EQUIPPE, University of Lille 1 and LEMNA, University of Nantes)

Abstract

Over the last thirty years, both developed and developing countries have experienced a huge globalization of their economies, which has coincided with an increase in intra-country income inequality, both within and between skill groups. This article surveys the key mechanisms of the globalization-inequality relationship. Four strands of literature are reviewed. First, the extension of the North-South HOS approach by relaxing certain simplifying assumptions makes it possible to generate most of the observed facts on trade and inter-skill group inequality, but also between unequally talented workers. Second, production segmentation and offshoring reveal several factors that increase inequality, particularly in developing countries. Third, accounting for firm heterogeneity generates intra-skill group inequality. Fourth, globalization causes changes in technologies and in institutions that can foster inequality. The mechanisms by which globalization raises inequality are thus numerous. A large part of the reviewed literature combines globalization with technological or/and institutional changes, which reconciles the three major explanations that have been given to the observed rise in inequality.

Suggested Citation

  • Nathalie Chusseau & Joël Hellier, 2012. "Globalization and Inequality: Where do we stand?," Working Papers 279, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2012-279
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    Cited by:

    1. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers 0151, CEDLAS, Universidad Nacional de La Plata.
    2. Joel Hellier & Ekaterina Kalugina, 2015. "Globalization and the working poor," Working Papers 355, ECINEQ, Society for the Study of Economic Inequality.
    3. Joël Hellier, 2012. "North-South Globalization and Inequality," Working Papers 273, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    Keywords

    Globalization; Inequality; North-South trade; Skill; Top incomes.;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • F1 - International Economics - - Trade
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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