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Globalization and social segmentation

Nathalie Chusseau and Joel Hellier

No 339, Working Papers from ECINEQ, Society for the Study of Economic Inequality

Abstract: To analyse the impacts of North-South globalization (NSG) and North-North globalization (NNG) upon social segmentation in advanced economies, we build a model in which (i) households differ in their skill and capital endowments, and (ii) there is a minimal consumption under which they are excluded from the labour market. NSG changes income distribution in favour of skilled labour and capital and NNG generates tax competition. The model endogenously generates four types of households: the excluded, the rentiers, the ‘classical’ (whose working time increases with real wages) and the ‘non-classical’ (displaying the opposite relationship). Globalization modifies the size of each group. NNG makes the groups of rentiers and excluded to expand whereas NSG has an inverted-U impact on the dimension of both groups. The simulations performed with plausible values of the parameters and factor payments show that Globalization (NSG+NNG) increases the number of excluded and the number of rentiers.

Keywords: Capital mobility; exclusion; globalization; rentiers; social segmentation; tax competition. (search for similar items in EconPapers)
JEL-codes: D31 D33 F16 H2 J22 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2014-09
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