Do Liberalization and Globalization Increase Income Inequality?

Posted: 6 Dec 2013

See all articles by Andreas Bergh

Andreas Bergh

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Therese Nilsson

Research Institute of Industrial Economics (IFN); Lund University - Department of Economics

Date Written: December 1, 2009

Abstract

Using the Standardized World Income Inequality Database, we examine if the KOF Index of Globalization and the Economic Freedom Index of the Fraser institute are related to within- country income inequality using panel data covering around 80 countries 1970-2005. Freedom to trade internationally is robustly related to inequality, also when adding several control variables and controlling for potential endogeneity using GMM. Social globalization and deregulation is also linked to inequality. Reforms towards economic freedom seem to increase inequality mainly in rich countries, and social globalization is more important in less developed countries. Monetary reforms, legal reforms and political globalization do not increase inequality.

Keywords: Liberalization, Economic freedom, Globalization, Income inequality, Institutions

JEL Classification: D63, F02, D30, C82

Suggested Citation

Bergh, Andreas and Nilsson, Therese, Do Liberalization and Globalization Increase Income Inequality? (December 1, 2009). European Journal of Political Economy, Vol. 26, No. 4, 2010, Available at SSRN: https://ssrn.com/abstract=2363793

Andreas Bergh (Contact Author)

Research Institute of Industrial Economics (IFN) ( email )

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HOME PAGE: http://www.ifn.se/web/AndreasB

Lund University - Department of Economics ( email )

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Lund
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HOME PAGE: http://www.nek.lu.se/

Therese Nilsson

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Lund University - Department of Economics ( email )

P.O. Box 7082
S-220 07 Lund
Sweden
+46 46 222 46 43 (Phone)

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