GLOBALIZATION AND INCOME INEQUALITY: EVIDENCE FROM BRICS-T COUNTRIES

Abstract

Income inequality has increased dramatically in most countries, especially in developing countries, over the past three decades and it has become a widespread concern. The widening income disparity within countries has coincided with the process in which countries are increasingly exposed to the globalization through increased flows of goods, services, capital and labour across international borders. This study examines the relationship between globalization (measured by both financial and trade variables) and income inequality (measured bu Gini index) using a panel dataset of BRICS-T countries over the 1990–2015 period. Several models are estimated by panel-corrected standard errors (PCSE) methodology. The findings indicate that trade openness’ effect is insignificant, while financial globalization occuring through stock market turnover rate, total assets and liabilities and capital account openness has been the driving force of income inequality in these countries since 1990.