Rising Income Inequality: Technology, or Trade and Financial Globalization?
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This article examined the relationship between the rapid pace of trade and financial globalization and the rise in income inequality observed in most countries over the past two decades, using a newly compiled panel of 51 countries over a 23-year period from 1981 to 2003.Abstract:
The paper examines the relationship between the rapid pace of trade and financial globalization and the rise in income inequality observed in most countries over the past two decades. Using a newly compiled panel of 51 countries over a 23-year period from 1981 to 2003, the paper reports estimates that support a greater impact of technological progress than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization—and foreign direct investment in particular—is associated with an increase in inequality.read more
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References
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Economic Growth and Income Inequality
TL;DR: The process of industrialization engenders increasing income inequality as the labor force shifts from low-income agriculture to the high income sectors as mentioned in this paper, and on more advanced levels of development inequality starts decreasing and industrialized countries are again characterized by low inequality due to the smaller weight of agriculture in production and income generation.
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Does Trade Cause Growth
TL;DR: This paper found that trade has a quantitatively large and robust, though only moderately statistically significant, positive effect on income and that countries' geographic characteristics have important effects on trade, and are plausibly uncorrelated with other determinants of income.
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Income Distribution and Macroeconomics
Oded Galor,Joseph Zeira +1 more
TL;DR: The authors analyzes the role of wealth distribution in macroeconomics through investment in human capital and shows that the initial distribution of wealth affects aggregate output and investment both in the short and in the long run, as there are multiple steady states.
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Income Inequality in the United States, 1913–1998
Thomas Piketty,Emmanuel Saez +1 more
TL;DR: The authors showed that the large shocks that capital owners experienced during the Great Depression and World War II have had a permanent effect on top capital incomes and argued that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks.
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Distributive Politics and Economic Growth
Alberto Alesina,Dani Rodrik +1 more
TL;DR: This paper analyzed the relationship between economics and politics and concluded that inequality is conducive to the adoption of growth-retarding policies, and presented cross-country evidence consistent with it. But their analysis focused on how an economy's initial configuration of resources shapes the political struggle for income and wealth distribution, and how that, in turn, affects long run growth.