Working Paper: CEPR ID: DP2865
Authors: Kevin H. O'Rourke
Abstract: ?This Paper surveys trends in both international economic integration and inequality over the past 150 years,as well as the links between them. In doing so, it distinguishes between (a) the different dimensions ofglobalization; and (b) between-country and within-country inequality. Theory suggests that globalization willhave very different implications for within-country inequality, depending on the dimension of globalizationinvolved (e.g. trade versus factor flows), on the country concerned, and on the distribution of endowments;the historical record provides ample evidence of this ambiguous relationship.Late 19th century globalization had large effects on within-country income distribution, but the effect oninequality differed greatly across countries: both trade and migration (but not capital flows) made the richNew World more unequal, and the (less rich) Old World more equal. The evidence on the links betweenwithin-country inequality and globalization in the late 20th century is mixed. The balance of evidencesuggests that globalization has been a force for between-country convergence in both the late 19th and late20th centuries; long run patterns of divergence are due to other factors (e.g. the unequal spread of theIndustrial Revolution).
Keywords: globalization; inequality; history
JEL Codes: F00; N70
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| late 19th-century globalization (F69) | within-country income distribution (D31) |
| trade and migration (O24) | wage-rental ratios in land-scarce regions (R21) |
| trade and migration (O24) | wage-rental ratios in land-abundant regions (D33) |
| capital flows (F32) | wage-rental ratios (J31) |
| globalization (F60) | within-country inequality in affluent regions (D31) |
| globalization (F60) | within-country inequality in poorer regions (F63) |
| between-country inequality (O57) | overall inequality trends (D31) |
| globalization (F60) | convergence in some contexts (O47) |
| globalization (F60) | divergence in other contexts (A12) |