Has Globalisation Increased Inequality?

KOF Working Papers / KOF Swiss Economic Institute No. 140

45 Pages Posted: 5 Sep 2006

See all articles by Axel Dreher

Axel Dreher

Heidelberg University

Noel Gaston

University of South Australia

Date Written: June 2006


There has been no shortage of theories which purport to explain why globalisation may have, adverse, insignificant or even beneficial effects on income and earnings inequality. Surprisingly, the empirical realities remain an almost complete mystery. In this paper we use data on industrial wage inequality, household income inequality as well as measures of the economic, social and political dimensions of globalisation to examine this controversial issue. We find that the economic dimension of globalisation, and - less robustly - political integration, have exacerbated wage inequality in developed countries. In contrast, the impact of globalisation on both income and earnings inequality in less-developed countries has been negligible.

Keywords: Income and earnings inequality, globalisation, democracy, panel regressions

JEL Classification: F02, D30, O57, C82

Suggested Citation

Dreher, Axel and Gaston, Noel, Has Globalisation Increased Inequality? (June 2006). KOF Working Papers / KOF Swiss Economic Institute No. 140. Available at SSRN: https://ssrn.com/abstract=928403 or http://dx.doi.org/10.2139/ssrn.928403

Axel Dreher (Contact Author)

Heidelberg University ( email )

Grabengasse 1
Heidelberg, 69117

HOME PAGE: http://www.axel-dreher.de

Noel Gaston

University of South Australia ( email )

37-44 North Terrace
Adelaide SA 5000, South Australia 5001

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