Why is Income Inequality Increasing in the Developed World?

TitleWhy is Income Inequality Increasing in the Developed World?
Publication TypeJournal Article
Year of Publication2014
AuthorsRoser, Max, and Cuaresma, Jesus Crespo
JournalReview of Income and Wealth
VolumeArticle first published online: 14 NOV 2014
Date Published2014/11/14/
KeywordsFDI, globalization, income inequality, inequality, international trade
Abstract

We address empirically the factors affecting the dynamics of income inequality among industrialized economies. Using a panel for 32 developed countries spanning the last four decades, our results indicate that the predictions of the Stolper–Samuelson theorem concerning the effects of international trade on income inequality find support in the data if we concentrate on imports from developing countries as a trade measure, as theory would imply. We find that democratization, the interaction of technology and education, and changes in the relative power of labor unions affect inequality dynamics robustly.

URLhttp://www.emod.ox.ac.uk/sites/emod.ox.ac.uk/files/CrespoCuaresmaRoser_Submitted.pdf