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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2008:12:
Do economic liberalization and globalization increase income inequality?

Andreas Bergh () and Therese Nilsson ()

Abstract: Using the newly developed KOF-index of globalization, as well as the economic freedom index from the Fraser institute, we examine if globalization and economic liberalizations are linked to increases in income inequality within countries. Studying changes between 1980 and 2000, we find a positive link between inequality and liberalization only for certain types of reforms: Trade liberalizations, deregulation of product and labor markets and economic globalization. The Scandinavian welfare states have increased economic freedom and globalization more than other countries, but they have also experienced high increases in income inequality.

Keywords: Economic freedom; Globalization; Income Inequality; Gini Coefficient; Welfare states; (follow links to similar papers)

JEL-Codes: D63; O11; P51; (follow links to similar papers)

22 pages, September 12, 2008

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