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Has Globalisation Increased Inequality?

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  • Axel Dreher
  • Noel Gaston

Abstract

There has been no shortage of theories which purport to explain why globalisation may have, adverse, insignificant or even beneficial effects on income and earnings inequality. Surprisingly, the empirical realities remain an almost complete mystery. In this paper we use data on industrial wage inequality, household income inequality as well as measures of the economic, social and political dimensions of globalisation to examine this controversial issue. We find that the economic dimension of globalisation, and - less robustly - political integration, have exacerbated wage inequality in developed countries. In contrast, the impact of globalisation on both income and earnings inequality in less-developed countries has been negligible.

Suggested Citation

  • Axel Dreher & Noel Gaston, 2006. "Has Globalisation Increased Inequality?," KOF Working papers 06-140, KOF Swiss Economic Institute, ETH Zurich.
  • Handle: RePEc:kof:wpskof:06-140
    DOI: 10.3929/ethz-a-005229541
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    Keywords

    Income and earnings inequality; Globalisation; Democracy; Panel regressions;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • D30 - Microeconomics - - Distribution - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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