Inequality and Globalization: Demand versus Supply Forces and Local Outcomes

This is a joint project with three institutions participating. It aims at producing high quality research in the area of economic inequality and international trade.

Project Description

In this project we study the causes and consequences of changes in economic inequality and its relation to the globalization process.

Our research agenda focuses on the relative importance of demand and supply forces. On the demand side, a connection between inequality and different economic outcomes arises as rich and poor households differ with respect to their consumption structure. We study the following questions: How does economic inequality, and with it consumer demand, affect R&D and patenting, technology diffusion, parallel imports and the environment? What are the effects of taxes, tariffs and increased trade competition on migration, productivity and innovation? How does inequality affect local prices? What is the significance of such demand effects relative to supply effects (technology, skills, …) on which the emphasis lies in most prior research? On the supply side, we study how the forces of globalization and technological change cause changes in earnings inequalities and labor market outcomes. We also study the role of financial market imperfections in shaping the relationship between inequality, international trade and technology adoption and their policy implications.  

Another focus of the project lies on the empirical analysis of the local consequences of the globalization process. We study the role of globalization on election outcomes and political decisions and also the complex connections between rising inequality and market liberalization.

This research project continues the research agenda started in Sinergia project
Economic Inequality and International Trade (CRSI11_132272 8) which concentrated on effects of inequality on patterns of international trade. In the new project we want to study the causes and consequences of changes in inequality and its relation to the globalization process, focusing on a much broader range of outcomes (innovation, technology diffusion, the environment, etc.).

Keywords

Globalization, Inequality, Trade, Innovation, Technology Transfer, Migration, Taxation, Patents, Capital Market Imperfections, Import Competition, Productivity Spillovers, Non-homothetic Preferences, Structural Estimation, Price Setting, Arbitrage, Environmental Degradation, Status Consumption, Elections, Political Polarization