2.6 Grwoth and Inequality

2.6 Grwoth and Inequality - What is the relationship...

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What is the relationship between growth and inequality? What are the main transmission mechanisms for inequality? Explain. Relevant readings: David Dollar – “Globalization, Poverty, and Inequality since 1980” Lindert and Williamson – “Does Globalization Make the World More Unequal?” Bourguignon and Morrison – “Inequality among World Citizens:1820 – 1992” Dollar: “One of the most contentious issues of globalization is the effect of global economic integration on inequality and poverty.” Many people claim that global economic integration is increasing poverty and inequality in the world. But, certain trends of the last 20 years challenge that assumption: Article documents 5 trends in the modern era of globalization, starting around 1980: 1) Growth rates in poor economies have accelerated and are higher than growth rates in rich countries for the first time in modern history. 2) The number of extremely poor people in the world has declined significantly – by 375 million people since 1981 – for the first time in history. 3) Global inequality has declined modestly, reversing a 200 year trend toward higher inequality. 4) Within-country inequality in general is not growing, though it has risen in several populous countries such as China, India, and the U.S. 5) Wage inequality is rising worldwide. Lindert and Williamson: The world economy has become more unequal over the last two centuries. Since within-country inequality exhibits no ubiquitous trend, it follows that virtually all of the observed rise in world income inequality has been driven by widening gaps between nations, while almost none of it has been driven by widening gaps within nations. Globalization has raised inequality between nations, but it has had no clear effect on
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This note was uploaded on 04/19/2010 for the course ECON 0430 taught by Professor Arroyoabad during the Fall '10 term at Middlebury.

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2.6 Grwoth and Inequality - What is the relationship...

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