Is Global Competition Making the Poor Even Poorer? Is Global Competition Making the Poor Even Poorer?

November 30, 1994

In recent years, average real wages have fallen, while the distribution of income has become less equal. This applies not just to the United States, but to a number of countries. At the same time, "globalization" has intensified, as national economies have become more closely connected through increased international commerce. Has globalization depressed wages and exacerbated inequality?

To address this issue, this article first presents some summary data on globalization and income distribution. Consideration is then given to various explanations of increasing income inequality. The author concludes that convincing evidence has not yet been marshaled to support the hypothesis that increased globalization has contributed substantially to greater inequality, although globalization remains suspect. He ends the article with some recommendations for policy.

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