Original scientific paper
https://doi.org/10.1080/1331677X.2021.1952466
Managing the impact of globalization and technology on inequality
Josip Tica
orcid.org/0000-0001-7937-1573
Tomislav Globan
orcid.org/0000-0001-5716-2113
Vladimir Arčabić
orcid.org/0000-0003-4173-8637
Abstract
This article tests the relative importance of globalization and
technological change in explaining income inequality at higher
and lower development levels. Besides, the article analyses the
effectiveness of a set of policy measures for fighting inequality.
We use relative pre-tax income shares as a proxy for inequality.
Several linear and non-linear threshold panel data models with
GDP per capita as the threshold variable are estimated for 42
countries over the period from 1994 to 2016. We find that technology is the most important generator of inequality, while the
effect of various globalization measures is weak and often insignificant. We find limited evidence that the effect of globalization
differs with respect to the level of GDP per capita. Our results
suggest that full employment policies in the low inflation environment are the most efficient solution for the inequality problem.
Higher employment and low inflation rate decrease the inequality
level. Other than that, we do not find other policy measures that
satisfy the one-size-fits-all criteria for tackling inequality. Instead, a
set of efficient policy measures against inequality, including
expenditures on education, minimum wage policies, and lending
rates, depend on the development level and idiosyncratic policies
and institutions.
Keywords
Inequality; technology; globalization; openness; threshold model; employment rate
Hrčak ID:
302033
URI
Publication date:
31.3.2023.
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