Does Globalization Mitigate Income Inequality

Abstract

Bechtel (2012) showed that economic anxiety accompanying loss of household income and purchasing power has harmful effects on consumer demand, voter turnout, institutional trust, societal satisfaction, and well being. This sequel shows that economic anxiety is driven by income inequality, which mimics the detrimental effects of economic anxiety. The strongest shock of income inequality is its incitement of societal dissatisfaction. It is demonstrated that globalization reduces income inequality, alleviating economic anxiety and its negative impacts. These effects were found in a large cross-national sample from the fifth round of the European Social Survey. They demonstrate the value of using survey responses as micro outcomes for assessing macro-economic phenomena.