IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The Effects of Globalisation on OECD Income Inequality: A static and dynamic analysis

  • Horácio C. Faustino
  • Carim Vali

Using the World Income Inequality Database and a static and dynamic panel data analysis, this paper analyses the correlation between income inequality in the OECD countries and economic globalization, measured by trade openness and foreign direct investment, for the period 1995-2007. The static analysis, conducted by means of the fixed-effects estimator, suggests that trade openness reduces inequality, whereas FDI is positively linked to inequality. Some control variables, such as unemployment and inflation, also have a positive effect on inequality. When we control for endogeneity, using the system GMM estimator with the Windmeijer correction for small samples, the results also show that trade openness decreases income inequality and that the FDI effect on inequality is not significant. The country’s economic growth causes inequality to increase, according to the findings of both our static and dynamic analyses.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://pascal.iseg.utl.pt/~depeco/wp/wp122011.pdf
Download Restriction: no

Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2011/12.

as
in new window

Length:
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:ise:isegwp:wp122011
Contact details of provider: Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  2. Bourguignon, F. & Morrisson, C., 1990. "Income distribution, development and foreign trade : A cross-sectional analysis," European Economic Review, Elsevier, vol. 34(6), pages 1113-1132, September.
  3. Axel Dreher & Noel Gaston, 2008. "Has Globalization Increased Inequality?," Review of International Economics, Wiley Blackwell, vol. 16(3), pages 516-536, 08.
  4. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  5. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March.
  6. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
  7. Cornia, G.A., 1999. "Liberalization, Globalization and Income Distribution," Research Paper 157, World Institute for Development Economics Research.
  8. Andreas Bergh & Günther Fink, 2008. "Higher Education Policy, Enrollment, and Income Inequality," Social Science Quarterly, Southwestern Social Science Association, vol. 89(1), pages 217-235.
  9. 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.
  10. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  11. Edwards, Sebastian, 1997. "Trade Policy, Growth, and Income Distribution," American Economic Review, American Economic Association, vol. 87(2), pages 205-10, May.
  12. Calderon, Cesar & Chong, Alberto, 2001. "External sector and income inequality in interdependent economies using a dynamic panel data approach," Economics Letters, Elsevier, vol. 71(2), pages 225-231, May.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ise:isegwp:wp122011. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vitor Escaria)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.