Book Review: Globalization and Inequality by Elhanan Helpman

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Book Review: Globalization and Inequality by Elhanan Helpman

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Bibliographic details

• Authors: Federico Rossi
• Published: December 1, 2018

Core thesis

• Elhanan Helpman argues that, while globalization may have affected inequality through a variety of channels, "the overwhelming finding of recent research ... is that this impact has been quantitatively small," and we must "look elsewhere for the chief culprit in rising inequality."
• The book traverses "three decades of theoretical and empirical research on international trade" to assess links between globalization and within-country income inequality, with particular attention to the United States.

Review summary and key findings

• Historical context:
  • Since the "beginning of the 19th century, the volume of global trade has increased dramatically."
  • In recent decades, many firms have globalized their production processes through offshoring and outsourcing.
• Factor proportions (traditional view):
  • The factor proportions theory suggests removal of trade barriers raised prices of goods relying more on highly skilled labor, widening wage gaps between high- and low-skilled workers in rich countries.
  • Empirical evidence reviewed in the book suggests "the magnitude of the effect is rather small" and "other subsidiary implications of the theory are not supported either."
• Alternative mechanisms examined:
  • Helpman reviews research that links globalization and inequality via:
  • The matching process between workers and firms.
  • The survival and growth of different types of firms.
  • Technological change interacting with international trade.
  • These approaches are "extremely rich and diverse" in theoretical sophistication, data, and empirical methodology.
  • Many of these lines of work are "in their infancy," so conclusions remain tentative.
• Overall empirical judgement:
  • The available evidence "does not support the view that globalization is to be blamed for the increase in inequality."

Contribution and value of the book

• Systematic categorization and discussion of diverse theoretical and empirical studies is highlighted as "perhaps the most valuable contribution of the book."
• The book is described as "highly readable" and written by "one of the most prominent globalization scholars."

Policy and public debate implications

• The recent policy debate on the labor market consequences of international trade is characterized as "ideological, vague, and ill-informed."
• Role for economists:
  • Economists have an "important mission of disseminating key findings from rigorous research and helping to ground the debate on data and logical reasoning."
  • Helpman's book is presented as "one essential attempt in that direction."

Publication details (as listed)

• Elhanan Helpman
• Globalization and Inequality
• Harvard University Press, Cambridge, MA, 2018, 232 pp., $26.95

Source: Book Review: Globalization and Inequality by Elhanan Helpman – IMF Finance & Development Magazine | December 2018

Content in this bundle

• Grounding the Debate
  • Grounding the Debate (Markdown version)
  • Grounding the Debate (PDF)
• Fundamentar el debate
  • Fundamentar el debate (Markdown version)
  • Fundamentar el debate (PDF)
• Mieux informer le débat
  • Mieux informer le débat (Markdown version)
  • Mieux informer le débat (PDF)
• book2
  • book2 (Markdown version)
  • book2 (PDF)
• 《全球化与不平等》伊勒哈南·赫尔普曼著 - 书评 - 金融与发展 - 国际货币基金组织季刊
  • 《全球化与不平等》伊勒哈南·赫尔普曼著 - 书评 - 金融与发展 - 国际货币基金组织季刊 (Markdown version)
  • 《全球化与不平等》伊勒哈南·赫尔普曼著 - 书评 - 金融与发展 - 国际货币基金组织季刊 (PDF)