P8: Inequality and globalization

The impact of globalization on inequality is one of the most hotly debated topics in development economics and policy. On the one hand, there is some evidence that globalization has reduced between-country inequality, particularly among those actively participating in globalization. On the other hand, it appears that many countries actively participating in globalization have experienced rising within-country inequality (e.g., China, India, Vietnam), particularly in the 1990s and the early 2000s where regional inequality and inequality by skills appears to drive rising inequality. Conversely, particularly some countries in Latin America experienced declining inequality recently. In this project we intend to investigate research question related to this context: How does globalization affect these trends in inequality within developing countries? How does that differ by country circumstances? Studying these questions would require careful theoretical modeling and empirical assessments of possible transmission mechanisms as well as the empirical assessment of these questions.