Globalization and income inequality

The objective of this dissertation is to provide an empirical investigation of the relationship between globalization and inequality in per capita income.;Movements of goods, services, and physical and human capital across borders affect a country's economy, as well as the between-country economic relationships. The effect of globalization on income inequality has become an intensely studied topic in international economics, although there is still no unanimous model explaining the link between them. This dissertation focuses on two related issues: cross-country inequality, and within-country inequality. The former refers to the difference in per capita incomes between countries. The latter refers to the inequality in income distribution within a country. This dissertation investigates the effect of globalization on income convergence between countries and income distribution inside a country.;The main conclusions obtained from the analysis can be summarized as follows: (1) As for cross-economy inequality, poorer economies grow faster than richer ones so that they converge in per capita income. The comparison between randomly selected economy groups and trading groups indicates that economies in trading groups are more likely to converge in per capita income growth. This gives support to the argument that trade helps convergence in per capita income across different economies. On the other hand, we also find that trade among more heterogeneous economies does not contribute to convergence significantly. (2) For within-economy inequality, there is a negative relationship between the globalization index and the Gini coefficient for all 60 countries in the study. Therefore, there is evidence supporting the claim that globalization helps reduce income distribution inequality within a country. (3) Previous studies suggest that education and urbanization are two major factors affecting income distribution within a country. In this analysis, increasing the educational level significantly reduces income inequality within a country, especially for developed countries. However, urbanization shows little explanatory power in the regression models.