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Globalization and Inequality

Working Paper 2012-279

Abstract

Over the last thirty years, both developed and developing countries have experienced a huge globalization of their economies, which has coincided with an increase in intra-country income inequality, both within and between skill groups. This article surveys the key mechanisms of the globalization-inequality relationship. Four strands of literature are reviewed. First, the extension of the North-South HOS approach by relaxing certain simplifying assumptions makes it possible to generate most of the observed facts on trade and inter-skill group inequality, but also between unequally talented workers. Second, production segmentation and offshoring reveal several factors that increase inequality, particularly in

Authors: Nathalie Chusseau, Joël Hellier.

Keywords: Globalization, Inequality, North-South trade, Skill, Top incomes.
JEL: D3, E24, E25, F1, J31, O15.