Journal Article

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

Branko Milanovic

in The World Bank Economic Review

Volume 19, issue 1, pages 21-44
Published in print February 2005 | ISSN: 0258-6770
Published online February 2005 | e-ISSN: 1564-698X | DOI: http://dx.doi.org/10.1093/wber/lhi003
Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys

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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 (proxied by the ratio of trade to gdp) 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 gdp ratio in purchasing power parity terms, as favored by some analysts, is inappropriate in studies of the effect of trade on income distribution.

Journal Article.  0 words. 

Subjects: Development Planning and Policy

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