An Investigation of the Nexus between Globalisation Dimensions and Income Inequality

• Autorzy: Zita Tamasauskiene , Skaidrė Žičkienė
• Języki publikacji: EN

Abstrakty

EN

Objective: The objective of the article is to explore the nexus between changes of various globalisation dimensions, defined by either policy (de jure) or outcomes (de facto), and the rise in income inequality in a panel of 27 EU countries during the period 1998-2017.

Research Design & Methods: In order to tackle endogeneity issues, the effect is empirically tested applying the appropriate one-step system generalised method of moments (GMM) technique. Globalisation is measured by the de jure and de facto trade, financial, social, and political KOF globalisation indexes. Income inequality is measured by net Gini. To examine the sensitivity of our findings, we apply the decile ratio and quintile ratio as dependent variables.

Findings: We have found several significant results. First, de jure trade and de jure financial globalisation exert a big affirmative influence on income inequality and suggest that changes in trade and financial policy have increased inequality in the EU countries. Second, the results testify that de jure and de facto political globalisation influence income inequality in various ways and opposing directions. Finally, the effect of social globalisation on income inequality lacks statistical significance.

Implications & Recommendations: De jure trade and financial globalisation measures which are based on tariffs, trade taxes, trade and investment regulations, etc. increase income inequality. Therefore, policymakers need to rethink their approach to trade and financial globalisation policy and ensure that the increasing benefits of globalisation and rising income would be distributed more equally between different groups of the population.

Contribution & Value Added: Economic literature has focused on the effect of different single indicators of economic globalisation on income distribution and inequality, while the effect of various globalisation dimensions is almost nonexistent. Contrary to previous studies, we also distinguish between de jure and de facto indicators of various dimensions of globalisation and reveal that they have diverse impacts on income inequality. (original abstract)

Słowa kluczowe

EN

Globalization; Income inequalities; Panel data

PL

Globalizacja; Nierówności dochodowe; Dane panelowe

• Czasopismo: Entrepreneurial Business and Economics Review
• Rocznik: 2021
• Tom: 9
• Numer: nr 2
• Strony: 39--53

Twórcy

autor

Zita Tamasauskiene

• Vilnius University, Lithuania

autor

Skaidrė Žičkienė

• Vilnius Gediminas Technical University

Bibliografia

• Åberg, R. (1989). Distributive Mechanisms of the Welfare State, a Formal Analysis and an Empirical Application. European Sociological Review, 5(2), 167-182. https://doi.org/10.1093/oxfordjournals.esr.a036514
• Agnello, L., Mallick, S.K., & Sousa, R.M. (2012). Financial Reforms and Income Inequality. Economics Letters, 116(3), 583-587. https://doi.org/10.1016/j.econlet.2012.06.005
• Asteriou, D., Dimelis, S., & Moudatsou, A. (2014). Globalization and Income Inequality: A panel Data Econometric Approach for the EU27 Countries. Economic Modelling, 36, 592-599. https://doi.org/10.1016/j.econmod.2013.09.051
• Auguste, D. (2018). Income Inequality, Globalization, and the Welfare State: Evidence from 23 Industrial Countries, 1990-2009. Sociological Forum, 33(3), 666-689. https://doi.org/10.1111/socf.12437
• Babones, S.J., & Vonada, D.C. (2009). Trade Globalization and National Income Inequality - Are They Related?. Journal of Sociology, 45(1), 5-30. https://doi.org/10.1177/1440783308099984
• Berg, A.J., Ostry, J.D., & Zettelmeyer, J. (2012). What Makes Growth Sustained. Journal of Development Economics, 98(2), 149-166. https://doi.org/10.1016/j.jdeveco.2011.08.002
• Bergh, A., & Nilsson, T. (2010). Do Liberalization and Globalization Increase Income Inequality?. European Journal of Political Economy, 26(4), 488-505. https://doi.org/10.1016/j.ejpoleco.2010.03.002
• Brady, D., & Sosnaud, B. (2009). The Politics of Economic Inequality. In K.T. Leicht & J.C. Jenkins (Eds.), Handbook of politics (pp. 521-541). New York: Springer. https://doi.org/10.1007/978-0-387-68930-2
• Cabral, R., García-Díaz, R., & Mollick, A.V. (2016). Does Globalization Affect Top Income Inequality?. Journal of Policy Modeling, 38(5), 916-940. https://doi.org/10.1016/j.jpolmod.2016.05.001
• Cassette, A., Fleury, N., & Petit, S. (2012). Income Inequalities and International Trade in Goods and Services: Short- and Long-Run Evidence. The International Trade Journal, 26(3), 223-254. https://doi.org/10.1080/08853908.2012.682023
• Dabla-Norris, E., Kochhar, K., Suphaphiphat, N., Ricka, F., & Tsounta, E. (2015). Causes and Consequences of Income Inequality: A Global Perspective. IMF Staff Discussion Note, 15(13). Washington, DC: International Monetary Fund. Retrieved from https://gsdrc.org/document-library/causes-and-consequences-of-incomeinequality- a-global-perspective/ on September 20, 2020.
• De Haan, J., & Sturm, J.E. (2017). Finance and Income Inequality: A Review and New Evidence. European Journal of Political Economy, 50, 171-195. https://doi.org/10.1016/j.ejpoleco.2017.04.007
• Dorn, F., Fuest, C., & Potrafke, N. (2017). Globalisation and Income Inequality Revisited. Discussion Paper, 056, 1-46. https://doi.org/10.2765/5830
• Dreher, A. (2006). The Influence of Globalization on Taxes and Social Policy: An Empirical Analysis for OECD Countries. European Journal of Political Economy, 22(1), 179-201. https://doi.org/10.1016/j.ejpoleco.2005.04.006
• Dreher, A., & Gaston, N. (2008). Has Globalization Increased Inequality?. Review of International Economics, 16(3), 516-536. https://doi.org/10.1111/j.1467-9396.2008.00743.x
• Eppinger, P., & Potrafke, N. (2016). Did Globalisation Influence Credit Market Deregulation?. World Economy, 39(3), 444-473. https://doi.org/10.1111/twec.12282 3
• Faustino, H., & Vali, C. (2013). The Effects of Globalization and Economic Growth on Income Inequality: Evidence for 24 OECD Countries. Argumenta Oeconomica, 1(30), 13-31.
• Feenstra, R.C., & Hanson, G.H. (1997). Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras. Journal of International Economics, 42, 371-393. https://doi.org/10.1016/S0022- 1996(96)01475-4
• Figini, P., & Gorg, H. (1999). Multinational Companies and Wage Inequality in the Host Country: The Case of Ireland. Weltwirtschaftliches Archiv, 135(4), 594-612. https://doi.org/10.1007/BF02707386
• Gourdon, J., Maystre, N., & de Melo, J. (2008). Openness, Inequality and Poverty: Endowments Matter. The Journal of International Trade & Economic Development, 17(3), 343-378. https://doi.org/10.1080/09638190802136978
• Gozgor, G., & Ranjan, P. (2015). Globalisation, Inequality, and Redistribution: Theory and Evidence. CESifo Working Paper, 5522, 1-37. https://doi.org/10.13140/RG.2.1.1410.6320
• Gradstein, M. (2007). Inequality, Democracy and the Protection of Property Rights. The Economic Journal, 117, 252-270. https://doi.org/10.1111/j.1468-0297.2007.02010.x
• Gygli, S., Haelg, F., Potrafke, N., & Sturm, J.E. (2019). The KOF Globalisation Index - revisited. The Review of International Organizations, 1-32. https://doi.org/10.1007/s11558-019-09344-2
• IMF. (2007). Globalization and Inequality. World Economic Outlook October 2007, 135-170. Retrieved from https:/ /www.imf.org/en/Publications/WEO/Issues/2016/12/31/Globalization-and-Inequality on September 20, 2020.
• Jaumotte, F., Lall, S., & Papageorgiou, C. (2013). Rising Income Inequality: Technology, or Trade and Financial Globalization?. IMF Economic Review, 61(2), 271-309. https://doi.org/10.1057/imfer.2013.7
• Jestl, S., Leitner, S.M., & Leitner, S. (2018). The Relative Impact of Different Forces of Globalisation on Wage Inequality: A Fresh Look at the EU Experience. Working Paper, 154, 1-50.
• Ketokivi, M., & McIntosh, C.N. (2017). Addressing the Endogeneity Dilemma in Operations Management Research: Theoretical, Empirical, and Pragmatic Considerations. Journal of Operations Management, 52, 1-14. https://doi.org/10.1016/j.jom.2017.05.001
• Khadraoui, N., & Smida, M. (2012). Financial Development and Economic Growth: Static and Dynamic Panel Data Analysis. International Journal of Economics and Finance, 4(5), 94-104. https://doi.org/10.5539/ijef.v4n5p94
• Kochan, T.A., & Riordan, C.A. (2016). Employment Relations and Growing Income Inequality: Causes and Potential Options for its Reversal. Journal of Industrial Relations, 58(3), 419-40. https://doi.org/10.1177/0022185616634337
• Kose, M.A., Prasad, E., Rogoff, K., & Wei, S-J. (2009). Financial Globalization: A Reappraisal. International Monetary Fund. Staff Papers, 56(1), 8-62.
• Kunieda, T., Okada, K., & Shibata, A. (2014). Finance and Inequality: How does Globalization Change their Relationship?. Macroeconomic Dynamics, 18(5), 1091-1128. https://doi.org/10.1017/S1365100512000843
• Lee, C.-C., Lee, C.-C., & Lien, D. (2020). Income Inequality, Globalization, and Country Risk: a Cross- Country Analysis. Technological and Economic Development of Economy, 26(2), 379-404. https://doi.org/10.3846/tede.2019.11414
• Martens, P., Caselli, M., De Lombaerde, P., Figge, L., & Scholte, J.A. (2015). New Directions in Globalization Indices. Globalizations, 12(2), 217-228. https://doi.org/10.1080/14747731.2014.944336
• Melitz, M. (2003). The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71(5), 1695-1725. https://doi.org/10.1111/1468-0262.00467
• Pérez-Moreno, S., & Angulo-Guerrero, M.J. (2016). Does Economic Freedom Increase Income Inequality? Evidence from the EU countries. Journal of Economic Policy Reform, 19(4), 327-347. https://doi.org/10.1080/17487870.2015.1128832
• Potrafke, N. (2013). Globalisation and Labor Market Institutions: International Empirical Evidence. Journal of Comparative Economics, 41(3), 829-842. https://doi.org/10.1016/j.jce.2013.02.002
• Potrafke, N. (2015). The Evidence on Globalisation. The World Economy, 38(3), 509-552. https://doi.org/10.1111/twec.12174
• Roine, J., Vlachos, J., & Waldenström, D. (2009). The Long-Run Determinants of Inequality: What Can We Learn from Top Income Data?. Journal of Public Economics, 93(7-8), 974-988. https://doi.org/10.1016/j.jpubeco. 2009.04.003
• Sánchez-López, C., Aceytuno, M.T., & de Paz-Báñez, M.A. (2019). Inequality and Globalisation: Analysis of European Countries. Economics and Sociology, 12(4), 84-100. https://doi.org/10.14254/2071-789X.2019/12-4/5
• Schmid, K.D., & Stein, U. (2013). Explaining Rising Income Inequality in Germany, 1991-2010. IMK Studies, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute, 32. Retrieved from https://www.boeckler. de/pdf/p_imk_study_32_2013.pdf on September 20, 2020.
• Shahbaz, M., Shahzad, S.J.H., Mahalik, M.K., & Hammoudeh, S. (2018). Does Globalisation Worsen Environmental Quality in Developed Economies?. Environmental Modeling & Assessment, 23(2), 141-156. https://doi.org/10.1007/s10666-017-9574-2
• Tridico, P., & Pariboni, R. (2018). Theoretical and Empirical Analyses of the Rise of Income Inequality in Rich Countries. In P. Arestis & M. Sawyer (Eds.), Inequality. Trends, Causes, Consequences, Relevant Policies (pp. 139-186). International Papers in Political Economy. Cham: Palgrave Macmillan. https://doi.org/10.1007/978-3-319-91298-1_4
• Tsai, M. (2007). Does globalization affect human well-being?. Social Indicators Research, 81, 103-126. https://doi.org/10.1007/s11205-006-0017-8
• Ullah, S., Akhtar, P., & Zaefarian, G. (2018). Dealing with Endogeneity Bias: The Generalized Method of Moments for Panel Data. Industrial Marketing Management, 71, 61-78. https://doi.org/10.1016/j.indmarman. 2017.11.010
• Valentin, F., Lang, V.F., & Tavares, M.M. (2018). The Distribution of Gains from Globalization. IMF Working Papers, 18(054), 1-66. International Monetary Fund. Retrieved from https://www.imf.org/en/Publications/ WP/Issues/2018/03/13/The-Distribution-of-Gains-from-Globalization-45722 on September 20, 2020.
• Voigt, S., Gutmann, J., & Feld, L.P. (2015). Economic Growth and Judicial Independence, a Dozen Years On: Cross- Country Evidence Using an Updated Set of Indicators. European Journal of Political Economy, 38, 197-211. https://doi.org/10.1016/j.ejpoleco.2015.01.004
• Wintoki, M.B., Linck, J.S., & Netter, J.M. (2012). Endogeneity and the Dynamics of Internal Corporate Governance. Journal of Financial Economics, 105(3), 581-606. https://doi.org/10.1016/j.jfineco.2012.03.005
• Yay, G., Taştan, H., & Oktayer, A. (2016). Globalization, Economic Freedom, and Wage Inequality: A Panel Data Analysis. Panoeconomicus, 63(5), 581-601. https://doi.org/10.2298/PAN130515024Y
• Zhou, L., Biswasy, B., Bowlesz, B., & Saunders, P. (2011). Impact of Globalization on Income Distribution Inequality in 60 Countries. Global Economy Journal, 11(1), 1-18. https://doi.org/10.2202/1524-5861.1628

Identyfikatory

DOI

10.15678/EBER.2021.090203