ON THE RELATIONSHIP BETWEEN HUMAN CAPITAL INEQUALITY AND GLOBALIZATION

Abstract

This study attempts to tackle the inequality and globalization issue by departing from the usual convention and studying the effect of globalization on another distribution, which is the distribution of human capital. We would like to investigate whether globalization helps to alleviate or worsen inequality in education and benefit everyone in the observed population in the same way in terms of education. Moreover, we would also like to analyze whether the benefit or loss experienced by countries differ across the level of development. Our focus is on the impact of the composite index of globalization as well as its three different dimensions on education inequality. The study shows that the developing countries (low and middle-income countries) do not necessarily benefit from globalization, which clearly contradicts the standard trade theory. This is because we observe the existence of variation of effects within the developing countries itself. Globalization narrows the education gap in low-income countries but it widens the gap in middle-income countries. Additionally, the study also show the importance of social and political globalization, which is often ignored in existing literature. The results are robust to different measures of globalization, exclusion of countries from different regions and inclusion of several control variables.Keywords: Globalization; Human Capital Inequality; System GMM.