Globalization and Inequality: Where Do We Stand?

ECINEQ Working Paper No. 2012-279

29 Pages Posted: 8 Jun 2013

See all articles by Nathalie Chusseau

Nathalie Chusseau

University of Lille I - EQUIPPE; MESHS-CNRS

Joël Hellier

LEM-CNRS (UMR 9221)

Date Written: November 1, 2012

Abstract

Over the last thirty years, both developed and developing countries have experienced a huge globalization of their economies, which has coincided with an increase in intra-country income inequality, both within and between skill groups. This article surveys the key mechanisms of the globalization-inequality relationship. Four strands of literature are reviewed. First, the extension of the North-South HOS approach by relaxing certain simplifying assumptions makes it possible to generate most of the observed facts on trade and inter-skill group inequality, but also between unequally talented workers. Second, production segmentation and offshoring reveal several factors that increase inequality, particularly in developing countries. Third, accounting for firm heterogeneity generates intra-skill group inequality. Fourth, globalization causes changes in technologies and in institutions that can foster inequality. The mechanisms by which globalization raises inequality are thus numerous. A large part of the reviewed literature combines globalization with technological or/and institutional changes, which reconciles the three major explanations that have been given to the observed rise in inequality.

Keywords: Globalization, Inequality, North-South Trade, Technology

JEL Classification: D33, D63, F16, J31

Suggested Citation

Chusseau, Nathalie and Hellier, Joël, Globalization and Inequality: Where Do We Stand? (November 1, 2012). ECINEQ Working Paper No. 2012-279, Available at SSRN: https://ssrn.com/abstract=2276462 or http://dx.doi.org/10.2139/ssrn.2276462

Nathalie Chusseau (Contact Author)

University of Lille I - EQUIPPE ( email )

Université Lille 1 Sciences et Technologies
Faculté des Sciences Economiques et Sociales
Villeneuve d'Ascq, 59655
France

MESHS-CNRS ( email )

2 Rue des Canonniers
Lille, 59000
France

Joël Hellier

LEM-CNRS (UMR 9221) ( email )

104, avenue du peuple Belge
Villeneuve d'Ascq Cedex, 59655
France

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