Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys

New data derived directly from household surveys are used to examine the effects of globalization on income distribution in poor and rich countries. The article looks at the impact of openness and of direct foreign investment on relative income sha...

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Bibliographic Details
Main Author:	Milanovic, Branko
Format:	Journal Article
Language:	English en_US
Published:	Published by Oxford University Press on behalf of the World Bank 2014
Subjects:	ABSOLUTE INCOMES ABSOLUTE TERMS ADVANCED ECONOMIES AGRICULTURE ASSET INEQUALITY AVERAGE ANNUAL AVERAGE CHANGE AVERAGE INCOME AVERAGE INCOMES AVERAGE RATE AVERAGE SHARE BASE YEAR BENCHMARK CAPITAL ACCOUNT CAPITAL ACCUMULATION CAPITAL ASSETS CAPITAL MARKETS COMMODITY CONSTANT PRICES CONSUMER PRICE INDEX COUNTRY SIZE COUNTRY-SPECIFIC EFFECTS CROSS-COUNTRY INCOME CROSS-COUNTRY STUDIES DATA SET DEMOCRACY DEMOGRAPHIC DEMOGRAPHIC CHANGE DEPENDENT VARIABLE DEPOSIT DEPOSIT RATE DEPOSITS DESCRIPTIVE STATISTICS DEVELOPING ECONOMIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT RESEARCH DIFFERENTIAL IMPACT DIRECT FOREIGN INVESTMENT DIRECT FOREIGN INVESTMENTS DISTRIBUTION DATA DISTRIBUTION OF INCOME DOMESTIC CAPITAL DOMESTIC CAPITAL MARKETS ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC OUTLOOK ECONOMIC POLICY ECONOMIC REFORMS ECONOMIC RESEARCH ECONOMIC REVIEW ECONOMIC SURVEYS ECONOMIC THEORY ECONOMICS RESEARCH ECONOMIES OF SCALE ELASTICITY EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL TEST ENDOGENOUS VARIABLES EXCHANGE RATE EXCHANGE RATES EXPLAINING INEQUALITY EXPLANATORY VARIABLE EXPLANATORY VARIABLES EXPORTS FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL CONSTRAINT FINANCIAL DEPTH FOREIGN COMPETITION FOREIGN DIRECT INVESTMENTS GDP GDP PER CAPITA GINI COEFFICIENT GLOBALIZATION GOVERNMENT EXPENDITURES GROWTH RATE GROWTH RATES HIGH CONCENTRATION HOUSEHOLD SURVEY DATA HOUSEHOLD SURVEYS HUMAN CAPITAL INCOME INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GROUPS INCOME GROWTH INCOME INEQUALITY INCOME LEVEL INCOME LEVELS INCOME REDISTRIBUTION INCOME SHARE INCOME SHARES INCREASED INEQUALITY INCREASING INEQUALITY INCREASING SHARE INDEPENDENT VARIABLES INEQUALITY INDEX INEQUALITY MEASURE INEQUALITY MEASURES INTEREST RATES INTERNATIONAL CAPITAL INTERNATIONAL ECONOMY INTERNATIONAL ORGANIZATIONS INTERNATIONAL TRADE LABOR MARKET LABOR MARKETS LAGGED VALUES LIVING STANDARDS LOCAL CURRENCY LOW INCOME M2 MEAN INCOME MEASURING INCOME INEQUALITY MEDIAN VOTER MEDIAN VOTER HYPOTHESIS MIDDLE CLASS NATIONAL INCOME NEGATIVE EFFECT NEGATIVE IMPACT NOMINAL INTEREST RATE NOMINAL RATE OUTPUT PER CAPITA GROWTH PER CAPITA INCOME PER CAPITA INCOMES PERSONAL INCOME POLICY ANALYSIS POLICY CHANGES POLICY ISSUES POLICY RESEARCH POLITICAL ECONOMY POLITICAL INSTITUTIONS POOR COUNTRIES POOR COUNTRY POVERTY DEBATE POVERTY REDUCTION POWER PARITY PURCHASING POWER REAL INCOME REAL INCOMES REAL INTEREST RATE REAL INTEREST RATES REAL MEAN INCOME REAL RATE REDUCING INEQUALITY RELATIVE INCOME RELATIVE INCOMES RICH COUNTRIES RICH PEOPLE SHORT-RUN CHANGES SIGNIFICANT EFFECT SKILLED LABOR SKILLED WORKERS SOCIAL TRANSFERS TRADE LIBERALIZATION TRADE OPENNESS TRADE REFORMS WAGE DIFFERENTIALS WAGE INEQUALITY WAGES WEALTH WELFARE LEVELS WORLD DEVELOPMENT INDICATORS WORLD ECONOMY WORLD INCOME DISTRIBUTION Microdata Set
Online Access:	http://documents.worldbank.org/curated/en/2005/01/17747514/can-discern-effect-globalization-income-distribution-evidence-household-surveys http://hdl.handle.net/10986/16484

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Summary:	New data derived directly from household surveys are used to examine the effects of globalization on income distribution in poor and rich countries. The article looks at the impact of openness and of direct foreign investment on relative income shares across the entire income distribution. It finds strong evidence that at low average income levels, the income share of the poor is smaller in countries that are more open to trade. As national income levels rise, the incomes of the poor and the middle class rise relative to the income of the rich. The article explains why using the trade to gross domestic product (GDP) ratio in purchasing power parity terms, as favored by some analysts, is inappropriate in studies of the effect of trade on income distribution.

Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys

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