Poverty and the Welfare Costs of Risk Associated with Globalization

19 Pages Posted: 3 Mar 2011

See all articles by Ethan A. Ligon

Ethan A. Ligon

University of California, Berkeley; Giannini Foundation

Date Written: January 21, 2005

Abstract

The notion of "globalization" implies future change, and the prospect of these future changes seems likely to increase the uncertainty faced by poor households in developing countries. In this paper we use data on the changes in Lorenz curves over the last fifty years for a sample of 34 (mostly developing) countries. Treating each country-quintile-year as an observation, we first account for variation in consumption expenditures. We find that global shocks and country-level shocks are each of roughly equal importance in explaining variation in country-quintile consumption growth. What we term "globalization shocks", or global shocks which (on average) have a differential impact on poor and rich households are smaller in magnitude but nonetheless play a statistically significant role in explaining variation in consumption growth across both time and across the world distribution of consumption expenditures.

Suggested Citation

Ligon, Ethan A., Poverty and the Welfare Costs of Risk Associated with Globalization (January 21, 2005). Available at SSRN: https://ssrn.com/abstract=1774064 or http://dx.doi.org/10.2139/ssrn.1774064

Ethan A. Ligon (Contact Author)

University of California, Berkeley ( email )

207 Giannini Hall #3310
Berkeley, CA 94720-3310
United States

Giannini Foundation

UC Davis
Davis, CA 95616
United States

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