On the relationship between globalization and income inequality: Does institution matter?

Osode, Oluwanbepelumi Esther; Iheonu, Chimere; Dauda, R.O.S

doi:10.1002/pa.2433

Cited by 5 publications

(16 citation statements)

References 30 publications

(42 reference statements)

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“…Moreover, this study also revealed that the "influence of institutional quality on income inequality also depends on the initial level of income inequality" (Osode, et al, 2020). In detail, "institutions significantly increase income inequality in countries where the initial levels of income inequality are low, while it insignificantly reduces income inequality in countries where the initial levels of income inequality are high (Osode, et al, 2020). Similarly, in the presence of improved quality of institutions, ODA increases inequality in the same manner as described above.…”

Section: Literature Reviewmentioning

confidence: 61%

“…Regarding the impact of trade openness, FDI, and official development assistance (ODA) on income inequality, Osode, et al ( 2020) identified that it "depends on initials levels of income inequality, that is, the either low or high initial level of income inequality". Moreover, this study also revealed that the "influence of institutional quality on income inequality also depends on the initial level of income inequality" (Osode, et al, 2020). In detail, "institutions significantly increase income inequality in countries where the initial levels of income inequality are low, while it insignificantly reduces income inequality in countries where the initial levels of income inequality are high (Osode, et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 71%

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Does Financial Development, Globalisation and Institutional Quality Drive the Income Convergence in the Central and Eastern European Union Countries?

PORUMBACEAN

Anghelina

2023

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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Central and Eastern European (CEE) countries are struggling with internal and external macroeconomic and social factors in their catching-up strategies to be closer, as economic wealth, to the Western developed European countries. In these ex-communist countries, institutional factors could be seen as critical for success in narrowing the income gap. The paper proposes an analysis of the impact of economic and financial development and globalization on the income gap in 11 Central and Eastern European (CEE) countries (Bulgaria, Croatia, Czechia, Estonia, Latvia, Lithuania, Poland, Romania, Slovak Republic and Slovenia) for the period of 1996 to 2019, taking into consideration institutional factors. The study analyses the variables: transition coefficient as a proxy for income gap, GDP per capita, KOF Financial Globalisation Index, Financial Development Index and World Bank Institutional Indicators in a panel approach methodology and estimation of FMOLS and DOLS equations. The paper’s findings show that all considered factors have a significant contribution to the income gap in the examined period of time. Economic and financial development, as well as institutional quality, is positively associated with the closing income gap, while globalization has a negative influence. It is also revealed the direction of the causality relationship between the considered variables: from economic and financial development, globalization and institutional quality to the income gap. These findings suggest some policy recommendations in support of the continuation of the European integration process.

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Section: Literature Reviewmentioning

confidence: 61%

Section: Literature Reviewmentioning

confidence: 71%

Does Financial Development, Globalisation and Institutional Quality Drive the Income Convergence in the Central and Eastern European Union Countries?

PORUMBACEAN

Anghelina

2023

Studia Universitatis „Vasile Goldis” Arad – Economics Series

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“…Table 4 presents the result of panel quantile regression, based on Equation (5). We reported results at 10th, 25th, 50th, 75th and 90th quantiles following the literature (Asongu et al, 2019;Osode et al, 2020); the results show that unfavorable distributional effect of overall financial globalization becomes lower at higher quantiles of inequality [6]. Put differently, the inequality-increasing effect of overall financial globalization is stronger at lower quantiles of inequality.…”

Section: Panel Quantile Estimation Resultsmentioning

confidence: 99%

“…However, the impact of globalization on income inequality plausibly varies at different quantiles of inequality and hence depends on initial income distribution (Han et al. , 2012; Osode et al. , 2020).…”

Section: Introductionmentioning

confidence: 99%

Financial globalization and income inequality nexus: panel quantile regression approach

Kebede

Tawiah

2021

JES

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PurposeThe general purpose of the paper is to examine the effect of financial globalization on income inequality. The specific purposes are: 1) To examine the effect of overall financial globalization on income inequality. 2) To analyze whether de facto and de jure financial globalization have differential effects on income inequality. 3) To scrutinize whether the effect of financial globalization on income inequality varies across countries of different income groups and quantiles of income inequality.Design/methodology/approachThe authors employed panel quantile regression using 73 countries over 2000–2016 to examine the effect of financial globalization on income inequality. The authors employed fixed effect and panel quantile regressions and classified the countries into income groups to compare differential effects of financial globalization across different income groups. Further, the authors unbundled financial globalization into de facto and de jure financial globalizations to investigate whether their effects on income inequality vary.FindingsOverall financial globalization raises income inequality more at lower quantiles of inequality. De jure financial globalization reduces income inequality in high-income countries. In high-income countries, de jure financial globalization has more favorable income distribution at lower quantiles of inequality. In contrast, de facto financial globalization raises inequality regardless of income classification of the countries.Originality/valueTo the best of the authors’ knowledge, the authors for the first time employed panel quantile regression to analyze whether financial globalization affects income inequality across different quantiles. In addition to de facto globalization, the authors used the newly developed de jure financial globalization index to examine its impact on income inequality. The de jure dimension is largely neglected in the literature. The authors provide empirical evidence on how the different dimensions of financial globalization, de facto and de jure, impact inequality in high-income, middle-income and low-income countries.

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“…Heimberger (2020) proved this finding, who makes a comparison between trade and financial globalisation found that the effect of trade globalisation is small, financial globalisation shows a more sizeable and significantly stronger toward inequality. Moreover, the effect of trade ever small, trade globalisation significantly reduces income inequality compared to financial globalisation significantly increase income inequality in the presence of improved institutional quality significantly (Osode et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

Heterogenous Impact of Globalisation on Income Inequality in Turkey

Ahmad

2021

LBIBF

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Theoretical claims about the globalisation-income nexus imply that globalisation in general benefits all groups of countries, that more integrated economies tend to grow faster and economic growth usually improves economic performance, social and political relations. However, previous literature shows opposite findings, globalisation drops developing countries into an income inequality trap. As a developing country, Turkey qualifies as one of the more unequal economies. In view of this, the study suggests the impact of globalisation on income distribution in Turkey is Heterogeneous by implementing Quantile Regression (QR) analysis. In doing so, the possibility of effects of globalisation on unequal explains two levels of the income distribution, namely high-level income and low-level income. This finding provides a thorough explanation for each quantile response from the income distribution. It was determined that the impact of globalisation on the low-income level is greater than the impact on the high-income level in Turkey. In rapidly growing unequal distribution, the income gap between low and high-income levels is even in decline. Thus, Turkey’s government should pay greater attention to the low-income group in order to mitigate the negative effects of globalisation. As well as a policy recommendation, it is recommended that Turkey’s governments to reform and welcome globalisation activities such as trade and FDI. Due to this suggestion, Turkey is highly recommended to well prepare training workers, education platforms and tariff deregulations. In sum, foreign financing and integration with the international capital markets will increase the productive capacity in the low-level income group.

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On the relationship between globalization and income inequality: Does institution matter?

Cited by 5 publications

References 30 publications

Does Financial Development, Globalisation and Institutional Quality Drive the Income Convergence in the Central and Eastern European Union Countries?

Does Financial Development, Globalisation and Institutional Quality Drive the Income Convergence in the Central and Eastern European Union Countries?

Financial globalization and income inequality nexus: panel quantile regression approach

Heterogenous Impact of Globalisation on Income Inequality in Turkey

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