The Distribution of Gains from Globalization

67 Pages Posted: 5 Apr 2018

See all articles by Valentin Lang

Valentin Lang

University of Zurich

Marina Mendes Tavares

International Monetary Fund (IMF) - Policy Development and Review Department

Date Written: March 2018

Abstract

We study economic globalization as a multidimensional process and investigate its effect on incomes. In a panel of 147 countries during 1970-2014, we apply a new instrumental variable, exploiting globalization's geographically diffusive character, and find differential gains from globalization both across and within countries: Income gains are substantial for countries at early and medium stages of the globalization process, but the marginal returns diminish as globalization rises, eventually becoming insignificant. Within countries, these gains are concentrated at the top of national income distributions, resulting in rising inequality. We find that domestic policies can mitigate the adverse distributional effects of globalization.

Keywords: Globalization, Growth, Inequality, Globalization: Macroeconomic Impacts, Globalization: Economic Development

JEL Classification: F62, F63, O15, O47, I24

Suggested Citation

Lang, Valentin and Mendes Tavares, Marina, The Distribution of Gains from Globalization (March 2018). IMF Working Paper No. 18/54, Available at SSRN: https://ssrn.com/abstract=3157017

Valentin Lang (Contact Author)

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Marina Mendes Tavares

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

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