How Does Globalization Affect Income Inequality? A Panel Data Analysis |
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Authors: | Sadullah Çelik Ulkem Basdas |
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Institution: | (1) Department of Economics, Marmara University, Goztepe Kampusu, Kuyubasi, Kadikoy, Istanbul, 34722, Turkey;(2) Department of Business Administration, Middle East Technical University, Sogutozu, Ankara, 06531, Turkey |
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Abstract: | 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. |
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