How Does Globalization Affect Income Inequality? A Panel Data Analysis

ÇELİK S., Basdas U.

International Advances in Economic Research, cilt.16, sa.4, ss.358-370, 2010 (Scopus) identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 16 Sayı: 4
  • Basım Tarihi: 2010
  • Doi Numarası: 10.1007/s11294-010-9281-0
  • Dergi Adı: International Advances in Economic Research
  • Derginin Tarandığı İndeksler: Scopus
  • Sayfa Sayıları: ss.358-370
  • Anahtar Kelimeler: FDI, Globalization, Income inequality, Panel cointegration, Trade volume
  • Orta Doğu Teknik Üniversitesi Adresli: Evet

Özet

One of the major issues on the state of income inequality is the effect of globalization through foreign direct investment (FDI). It is well known that FDI inflows create employment opportunities for unskilled labor intensive countries. Hence, during recessionary (expansionary) periods, FDI outflows should cause an increase in a developing (developed) country's unemployment rate, worsening income inequality. This study differs from the previous literature by employing the key variables FDI, trade volume, and GINI coefficient for a panel of three groups of countries (developed, developing, and miracle countries). We estimated panel cointegration coefficients via FM-OLS. Our results show that the effects of trade liberalization and FDI on income distribution differ for different country groups. © 2010 International Atlantic Economic Society.