Munich Personal RePEc Archive

An Acceleration Mechanism of Within-Country Inequality by Globalization

Harashima, Taiji (2018): An Acceleration Mechanism of Within-Country Inequality by Globalization.

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Abstract

This paper examines the possibility that the increases in within-country economic inequality that were observed in many countries since the 1980s were caused by deepening globalization through uneven capital accumulation across households by constructing a model based on the concept of sustainable heterogeneity. The model indicates that unless a government strengthens social welfare measures appropriately as globalization deepens (i.e., increases transfers from more-advantaged households to less-advantaged households), the level of within-country economic inequality will continue to increase. This result indicates the recent increases in within-country economic inequality may have been caused at least partially by the inaction of governments in the face of increasing globalization.

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