Globalization and earnings inequality in metropolitan areas: evidence from the USA

Abstract

This study examines how the dynamics of the global economy, particularly new patterns of capital ownership, affect earnings inequality in the 276 US metropolitan areas and how these patterns vary across the USA between the south and non-south. We examine the impact of five measures of globalization (global capital, foreign direct investment, exports, foreign-born non-citizens and foreign-born citizens) and four measures of labour market transformation (deindustrialization, corporate restructuring, bureaucratic burden and casualization) on two distinct dimensions of metropolitan-level earnings inequality: upper-tail and lower-tail inequality. We find significant effects of these nine measures on inequality and important variations in their effects in southern and non-southern metropolitan areas.