1. CAN WE DISCERN THE EFFECT OF GLOBALIZATION ON INCOME DISTRIBUTION? EVIDENCE FROM HOUSEHOLD SURVEYS
- Author
-
Branko Milanovic
- Subjects
TRADE LIBERALIZATION ,REAL INCOME ,HIGH CONCENTRATION ,GROWTH RATES ,DEMOGRAPHIC ,ECONOMIC GROWTH ,EXCHANGE RATES ,NOMINAL INTEREST RATE ,ABSOLUTE INCOMES ,DEPOSIT ,INEQUALITY MEASURES ,COMMODITY ,ECONOMIC REFORMS ,POOR COUNTRIES ,Economics ,WAGE DIFFERENTIALS ,DEPENDENT VARIABLE ,REAL MEAN INCOME ,SOCIAL TRANSFERS ,Net national income ,DISTRIBUTION DATA ,INCOME ,FEDERAL RESERVE ,POLICY ISSUES ,REAL INTEREST RATE ,DATA SET ,DOMESTIC CAPITAL ,HOUSEHOLD SURVEY DATA ,EXPLANATORY VARIABLES ,REAL RATE ,TRADE OPENNESS ,Microdata Set ,EXPLAINING INEQUALITY ,PERSONAL INCOME ,Per capita income ,WORLD DEVELOPMENT INDICATORS ,Gross domestic income ,POLITICAL INSTITUTIONS ,ABSOLUTE TERMS ,CONSUMER PRICE INDEX ,SHORT-RUN CHANGES ,AVERAGE CHANGE ,PER CAPITA INCOME ,DEVELOPMENT RESEARCH ,AVERAGE SHARE ,FOREIGN COMPETITION ,GINI COEFFICIENT ,SIGNIFICANT EFFECT ,RELATIVE INCOME ,DISTRIBUTION OF INCOME ,SKILLED WORKERS ,AVERAGE INCOMES ,ECONOMIC OUTLOOK ,LIVING STANDARDS ,POOR COUNTRY ,INCOME SHARE ,EXPLANATORY VARIABLE ,RICH PEOPLE ,Development ,DEMOCRACY ,DEVELOPMENT ECONOMICS ,DEPOSITS ,ECONOMICS RESEARCH ,Personal income ,DEVELOPING WORLD ,FEDERAL RESERVE BANK ,Income distribution ,WAGES ,PURCHASING POWER ,CROSS-COUNTRY INCOME ,FINANCIAL DEPTH ,NATIONAL INCOME ,LABOR MARKET ,INCOME REDISTRIBUTION ,INCOME INEQUALITY ,ELASTICITY ,GOVERNMENT EXPENDITURES ,Gross income ,GDP PER CAPITA ,DEPOSIT RATE ,INTEREST RATES ,ECONOMIC LITERATURE ,POVERTY REDUCTION ,WORLD INCOME DISTRIBUTION ,INCOME LEVELS ,LOW INCOME ,INCREASING SHARE ,PER CAPITA INCOMES ,HOUSEHOLD SURVEYS ,TRADE REFORMS ,EMPIRICAL EVIDENCE ,COUNTRY SIZE ,Labour economics ,REAL INCOMES ,WEALTH ,AGRICULTURE ,DESCRIPTIVE STATISTICS ,DEMOGRAPHIC CHANGE ,ECONOMIC THEORY ,DEVELOPING ECONOMIES ,ADVANCED ECONOMIES ,M2 ,ECONOMIC REVIEW ,GDP ,FOREIGN DIRECT INVESTMENTS ,jel:I3 ,WAGE INEQUALITY ,BASE YEAR ,ENDOGENOUS VARIABLES ,POLITICAL ECONOMY ,EMPIRICAL ANALYSIS ,INCOME DISTRIBUTION ,CROSS-COUNTRY STUDIES ,EXPORTS ,MEDIAN VOTER ,MEASURING INCOME INEQUALITY ,INCOME SHARES ,LAGGED VALUES ,CAPITAL MARKETS ,BENCHMARK ,jel:D31 ,AVERAGE INCOME ,INTERNATIONAL TRADE ,MEDIAN VOTER HYPOTHESIS ,REAL INTEREST RATES ,Income in kind ,CONSTANT PRICES ,INEQUALITY INDEX ,DIRECT FOREIGN INVESTMENTS ,OUTPUT ,EXCHANGE RATE ,HUMAN CAPITAL ,CAPITAL ASSETS ,ECONOMIC SURVEYS ,INDEPENDENT VARIABLES ,Economics and Econometrics ,CAPITAL ACCOUNT ,NEGATIVE IMPACT ,DIFFERENTIAL IMPACT ,INTERNATIONAL ORGANIZATIONS ,INCOME LEVEL ,ECONOMIC POLICY ,NOMINAL RATE ,PER CAPITA GROWTH ,AVERAGE RATE ,SKILLED LABOR ,ASSET INEQUALITY ,POLICY RESEARCH ,income distribution, inequality, globalization ,REDUCING INEQUALITY ,INCREASING INEQUALITY ,GROWTH RATE ,Accounting ,RELATIVE INCOMES ,AVERAGE ANNUAL ,WELFARE LEVELS ,GLOBALIZATION ,LABOR MARKETS ,NEGATIVE EFFECT ,INCOME GROUPS ,WORLD ECONOMY ,EMPIRICAL TEST ,INCOME DISTRIBUTIONS ,POLICY ANALYSIS ,INCREASED INEQUALITY ,POWER PARITY ,INCOME GROWTH ,MIDDLE CLASS ,DIRECT FOREIGN INVESTMENT ,DOMESTIC CAPITAL MARKETS ,CAPITAL ACCUMULATION ,COUNTRY-SPECIFIC EFFECTS ,ECONOMIES OF SCALE ,MEAN INCOME ,POVERTY DEBATE ,FINANCIAL CONSTRAINT ,jel:F15 ,Income inequality metrics ,INEQUALITY MEASURE ,RICH COUNTRIES ,ECONOMIC RESEARCH ,LOCAL CURRENCY ,INTERNATIONAL ECONOMY ,POLICY CHANGES ,Finance ,INTERNATIONAL CAPITAL - Abstract
The effects of globalization on income distribution within rich and poor countries are a matter of controversy. While international trade theory in its most abstract formulation implies that increased trade and foreign investment should make income distribution more equal in poor countries and less equal in rich countries, finding these effects has proved elusive. The paper presents another attempt to discern the effects of globalization by using the new data derived directly from household surveys. The paper looks at the impact of openness (trade/GDP ratio) and direct foreign investment on relative income shares across the entire income distribution. In contrast to what one would expect from theory, we find strong evidence that at low average income level, it is the rich who benefit from openness. As income level rises, that is around the income level of $5-7,000 per capita at international prices, the situation changes and it is the relative income of the poor and the middle class that rises compared to the rich. It seems that openness makes income distribution worse before making it better—or differently that the effect of openness on on income distribution depends on country’s average income level.
- Published
- 2003