Does Globalization Make the World More Unequal?

58 Pages Posted: 8 Apr 2001 Last revised: 12 Jul 2014

See all articles by Peter H. Lindert

Peter H. Lindert

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus; Honorary Fellow, University of Wisconsin - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: April 2001

Abstract

The world economy has become more unequal over the last two centuries. Since within- country inequality exhibits no ubiquitous trend, it follows that virtually all of the observed rise in world income inequality has been driven by widening gaps between nations, while almost none of it has driven by widening gaps within nations. Meanwhile, the world economy has become much more globally integrated over the past two centuries. If correlation meant causation, these facts would imply that globalization has raised inequality between nations, but that it has had no clear effect on inequality within nations. This paper argues that the likely impact of globalization on world inequality has been very different from what these simple correlations suggest. Globalization probably mitigated rising inequality between participating nations. The nations that gained the most from globalization are those poor ones that changed their policies to exploit it, while the ones that gained the least did not, or were too isolated to do so. The effect of globalization on inequality within nations has gone both ways, but here too those who have lost the most from globalization typically have been the excluded non-participants. In any case far too small to explain the observed long run rise in world inequality.

Suggested Citation

Lindert, Peter H. and Williamson, Jeffrey G., Does Globalization Make the World More Unequal? (April 2001). NBER Working Paper No. w8228, Available at SSRN: https://ssrn.com/abstract=266198

Peter H. Lindert (Contact Author)

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Jeffrey G. Williamson

Harvard University - Department of Economics, Laird Bell Professor of Economics, Emeritus ( email )

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