Rising Income Inequality: Technology, or Trade and Financial Globalization?

By Chris Papageorgiou, Subir Lall, Florence Jaumotte

July 1, 2008

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Chris Papageorgiou, Subir Lall, and Florence Jaumotte. Rising Income Inequality: Technology, or Trade and Financial Globalization?, (USA: International Monetary Fund, 2008) accessed September 18, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. We find technological progress as having a greater impact 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. A key finding is that both globalization and technological changes increase the returns on human capital, underscoring the importance of education and training in both developed and developing countries in addressing rising inequality.

Subject: Foreign direct investment, Globalization, Income distribution, Income inequality, Personal income

Keywords: Gini coefficient, Income, WP

Publication Details

Pages:

36
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/185
Stock No:

WPIEA2008185
ISBN:

9781451870435
ISSN:

1018-5941

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