Date of Award

5-2013

Document Type

Thesis

Degree Name

Master of Arts (MA)

Legacy Department

Economics

Advisor

Jerzmanowski, Michal

Committee Member

Baier, Scott

Committee Member

Tsui, Kevin

Abstract

The paper explores whether globalization have impact of income distributions among upper class, middle class and lower class. In other words, we are trying to find the relationship between rapidly growing globalization and income inequality. In general, globalization boosts FDI, wage raise and productivity (Pica 2007). However, according to the past researches, the gap of wage inequality among high-class workers, middle-class workers and low-class works in a given country was becoming wider and wider as globalization increase. Using the panel data of 26 countries over a period 38 years from 1970-2011, we set up three regression models in order to test the relationship between globalization and wage inequality. The formed a measurement for wage inequality by taking top or bottom average wage and divide average wage. We found that the coefficient of total FDI and wage inequality is positive, which wage inequality increases as total FDI increases. The result also shows that once we eliminated economic flows of economic restrictions from the globalization index and only include political restrictions aspect and cultural aspect of globalization in the regression, we found that economic restrictions and cultural aspect is not significant. That means lower restriction boundaries and similar culture does not have impact on wage inequality.

Included in

Economics Commons

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