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October 18, 2007
IMF Report on Globalization & Inequality
The IMF is releasing a report on the effects of globalization on income inequality in various countries around the world. While the report does show that inequality has increased, this is not about the rich getting richer. Instead, it seems to be about the skilled getting richer faster than the unskilled.
Here's some interesting analysis from Gary Becker:
The report analyzes what happened to incomes and inequality in over 50 countries. It finds that essentially all these countries had large increases in per capita incomes since the early 1980's. While the growth was positive at different income levels, including those at the very bottom, income growth was not uniform among different skills...
However, the most powerful effect on inequality from globalization is due to transfers of modern technologies. The evidence from developed economies has been that modern technologies, like the computer and Internet, favor more educated and other skilled workers; in economic parlance, that these technologies are skill biased. This effect of technological progress has been used to explain the sharply rising gap in earnings between college graduates and others during the past three decades in the United States. Not surprisingly, the IMF's study finds that a similar skill bias applies to international technology transfers, that they raised the earnings gap between more skilled and less skilled workers in developing countries.
Read the full text.
Politics by Dan at October 18, 2007 04:55 PM