Globalization and Wage Inequality

Elhanan Helpman

No 11701, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Globalization has been blamed for rising inequality in rich and poor countries. Yet the views of many protagonists in this debate are not based on evidence. To help form an evidence-based opinion, I review in this paper the theoretical and empirical literature on the relationship between globalization and wage inequality. While the initial analysis that started in the early 1990s focused on a particular mechanism that links trade to wages, subsequent studies have considered several other channels, and the quantitative assessment of the size of these influences has been carried out in multiple studies. Building on this research, I conclude that trade played an appreciable role in increasing wage inequality, but that its cumulative effect has been modest, and that globalization does not explain the preponderance of the rise in wage inequality within countries.

Keywords: International trade; College wage premium; Inequality; Residual inequality (search for similar items in EconPapers)
JEL-codes: F10 F61 F66 (search for similar items in EconPapers)
Date: 2016-12
New Economics Papers: this item is included in nep-int and nep-ltv
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Citations: View citations in EconPapers (43)

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Working Paper: Globalization and Wage Inequality (2016)
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