Economic Globalization and Income Inequality: Cross-country Empirical Evidence

Sovna Mohanty

Working Papers from eSocialSciences

Abstract: This paper analyses the effect of economic globalization on income inequality in both cross-country and country-specific framework using panel data techniques and policy simulations. The sample comprises of developed, developing and least-developed countries in the post-liberalization period. The results show that on the whole, globalization has helped in reducing inequality in the advanced economies but has the opposite effect in low-income economies. Trade and FDI have offsetting experiences; trade worsens income distribution whereas FDI is beneficial in all the economies and helps to reduce income inequality. FDI is found to have a greater impact on reducing income inequality. The policy simulations prove that India can reduce its income inequality by adopting the strategies of high income and middle income nations.

Keywords: Globalization; Inequality; Trade Openness; FDI; ICT; economic globalization; income inequality; data techniques; policy simulations; post-liberalization period; low-income economies; high income; middle income nations. (search for similar items in EconPapers)
Date: 2017-09
Note: Institutional Papers
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