:: Volume 14, Issue 2 (Spring 2019) ::
J. Mon. Ec. 2019, 14(2): 159-175 Back to browse issues page
Globalization and Income Inequality: Does the Level of Financial Development Matter?
Roohollah Zare
Islamic Azad University, Beyza Branch
Abstract:   (575 Views)
This paper examines the impact of globalization on income inequality in a panel of 78 developed and developing countries over 2002–2015. Moreover, the indirect effect of financial development in the link between globalization and income inequality is also analyzed by incorporating the interaction term between globalization and financial development. The empirical evidence based on the first-difference generalized method of moments (difference GMM) estimator suggested by Arellano and Bond (1991) and the system GMM estimator proposed by Arellano and Bover (1995) shows that globalization tends to worsen income inequality. However, the magnitude of the impact of globalization on income inequality is decreased with higher levels of financial development. These findings suggest that a higher level of financial development results in equal income distribution in a globalized world. As a policy implication, policymakers should improve the level of financial development to mitigate the adverse effects of globalization on income distribution.
Keywords: globalization, financial development, income inequality, GMM
Full-Text [PDF 194 kb]   (584 Downloads)    
Type of Study: Original Research - Theoric | Subject: Macroeconomics
Received: 4 Jul 2019 | Accepted: 29 Feb 2020 | Published: 5 May 2020


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Volume 14, Issue 2 (Spring 2019) Back to browse issues page