Globalization, Inequality, and the Rich Countries of the G-20: Evidence from the Luxembourg Income Study (LIS)
The purpose of this study is to summarize and comment upon what we know about the determinants of both the level and trend in economic inequality over the past two decades, and to relate these findings to the progress of globalization in these nations. While the fruits of economic progress in rich nations have not been equally spread, we argue that most citizens inrich Organization for Economic Cooperation and Development (OECD) nations have benefited from the trend toward global economic progress. We begin with a summary of the differences in overall economic inequality within the G-20 nations based on LIS (Luxembourg Income Study) data and recent work by others. Here we find that social policies, wage distributions, time worked, social and labor institutions, and demographic differences all have some influence on why there are large differences in inequality among rich nations at any point in time. In contrast, trade policy has not been shown to have any major impact on economic inequality. Next we turn to trends in inequality. We find modest and sometimes dissimilar changes in the distribution of income have taken place within most advanced nations, with most finding a higher level of inequality in the mid to late 1990s than in the 1980s. Inequality, however, has not risen markedly in some nations (e.g., Denmark, Germany, France, and Canada) over this period, while its rise has slowed in several other nations during the late 1990s. The explanations for rising inequality in rich countries are many, and no one single set of explanations is ultimately convincing. In particular, there is no evidence that we know of that trade and globalization is bad for rich countries. This suggests that rising economic inequality is not inevitable, or that it necessarily hurts low-skill, low-income families. Rather, it suggests that globalization does not force any single outcome on any country. Domestic policies and institutions still have large effects on the level and trend of inequality within rich and middle-income nations, even in a globalizing world economy.
|Date of creation:||Nov 2002|
|Contact details of provider:|| Postal: 426 Eggers Hall, Syracuse, New York USA 13244-1020|
Phone: (315) 443-3114
Fax: (315) 443-1081
Web page: http://www.maxwell.syr.edu/cpr.aspx
More information through EDIRC
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.:
- David Card & John E. DiNardo, 2002.
"Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles,"
Journal of Labor Economics,
University of Chicago Press, vol. 20(4), pages 733-783, October.
- David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc.
- Gottschalk, Peter & Smeeding, Timothy M., 2000. "Empirical evidence on income inequality in industrialized countries," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 5, pages 261-307 Elsevier.
- Steve Dowrick & Muhammad Akmal, 2005. "Contradictory Trends In Global Income Inequality: A Tale Of Two Biases," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(2), pages 201-229, 06.
- Paul Gertler & Jonathan Gruber, 1997.
"Insuring Consumption Against Illness,"
NBER Working Papers
6035, National Bureau of Economic Research, Inc.
- Lars Osberg & Andrew Sharpe, 2002. "International Comparisons of Trends in Economic Well-being," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 58(1), pages 349-382, June.
- Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
- Peter Gottschalk & Mary Joyce, 1997.
"Cross-National Differences in the Rise in Earnings Inequality: Market and Institutional Factors,"
Boston College Working Papers in Economics
366, Boston College Department of Economics.
- Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
- Xavier Sala-i-Martin, 2001.
"The disturbing 'rise' of global income inequality,"
Economics Working Papers
616, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2002.
- Beblo, Miriam & Knaus, Thomas, 2000. "Measuring Income Inequality in Euroland," IRISS Working Paper Series 2000-10, IRISS at CEPS/INSTEAD.
- Lars Osberg, 1998. "Economic Insecurity," Discussion Papers 0088, University of New South Wales, Social Policy Research Centre.
- Miguel Székely & Marianne Hilgert, 1999. "What's Behind the Inequality We Measure: An Investigation Using Latin American Data," IDB Publications (Working Papers) 6458, Inter-American Development Bank.
- Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September.
- Francine D. Blau & Lawrence M. Kahn, 2001.
"Do Cognitive Test Scores Explain Higher US Wage Inequality?,"
NBER Working Papers
8210, National Bureau of Economic Research, Inc.
- Francine D. Blau & Lawrence M. Kahn, 2005. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 184-193, February.
- Francine D. Blau & Lawrence Kahn, 2004. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," CESifo Working Paper Series 1139, CESifo Group Munich.
- Danny Quah, 2002. "One third of the world's growth and inequality," LSE Research Online Documents on Economics 2019, London School of Economics and Political Science, LSE Library.
- Smeeding, Timothy M & Sullivan, Dennis H, 1998. "Generations and the Distribution of Economic Well-Being: A Cross-National View," American Economic Review, American Economic Association, vol. 88(2), pages 254-258, May.
- Deininger, Klaus & Squire, Lyn, 1996.
"A New Data Set Measuring Income Inequality,"
World Bank Economic Review,
World Bank Group, vol. 10(3), pages 565-591, September.
- Klaus Deininger & Lyn Squire, 1996. "A New Data Set Measuring Income Inequality," CEMA Working Papers 512, China Economics and Management Academy, Central University of Finance and Economics.
- Hongyi Li & Lyn Squire & Tao Zhang & Heng-fu Zou, 1999. "A Data Set on Income Distribution," CEMA Working Papers 575, China Economics and Management Academy, Central University of Finance and Economics.
- Dan Devroye & Richard Freeman, 2002.
"Does Inequality in Skills Explain Inequality of Earnings Across Advanced Countries?,"
CEP Discussion Papers
dp0552, Centre for Economic Performance, LSE.
- Dan Devroye & Richard B. Freeman, 2002. "Does inequality in skills explain inequality of earnings across advanced countries?," LSE Research Online Documents on Economics 20058, London School of Economics and Political Science, LSE Library.
- Dan Devroye & Richard B. Freeman, 2001. "Does Inequality in Skills Explain Inequality in Earnings Across Advanced Countries?," NBER Working Papers 8140, National Bureau of Economic Research, Inc.
- van Praag, Bernard M S & Hagenaars, Aldi J M & van Weeren, Hans, 1982. "Poverty in Europe," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 28(3), pages 345-359, September.
- Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
- Paul Beaudry & David Green, 2000. "The Changing Structure of Wages in the US and Germany: What Explains the Differences?," NBER Working Papers 7697, National Bureau of Economic Research, Inc.
- No authors listed, 2001. "New Economy," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 27(1), pages 1-1.
- Daron Acemoglu, 2002.
"Cross-Country Inequality Trends,"
NBER Working Papers
8832, National Bureau of Economic Research, Inc.
- Quah, Danny, 2002. "One Third of the World's Growth and Inequality," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).
- Danny Quah, 2002. "One Third of the Worlds Growth and Inequality," CEP Discussion Papers dp0535, Centre for Economic Performance, LSE.
- Osberg, L., 2000. "Long Run Trends in Economic Inequality in Five Countries - a Birth Cohort View," Department of Economics at Dalhousie University working papers archive 2000-1, Dalhousie, Department of Economics.
- Michael F. Förster, 2000. "Trends and Driving Factors in Income Distribution and Poverty in the OECD Area," OECD Labour Market and Social Policy Occasional Papers 42, OECD Publishing.
- Miguel Székely & Marianne Hilgert, 1999. "What's Behind the Inequality we Measure: An Investigation Using Latin American Data," Research Department Publications 4188, Inter-American Development Bank, Research Department.
- Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
- Roman Arjona & Maxime Ladaique & Mark Pearson, 2001. "Growth, Inequality and Social Protection," OECD Labour Market and Social Policy Occasional Papers 51, OECD Publishing.
- Quah, Danny, 2002. "One Third of the World's Growth and Inequality," CEPR Discussion Papers 3316, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:max:cprwps:48. 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: (Kelly Bogart)or (Katrina Wingle)
If references are entirely missing, you can add them using this form.