The Relationship between Globalization and Income Inequality in South Africa
Keywords:
Globalization, Income distribution, Inequality
Abstract
The wave of globalization is having far-reaching implications for the economic wellbeing of citizens in all regions and among all income groups.
Using data from 1994q1 to 2012q4, the paper investigates the relationship between globalization and income inequality in South Africa. We find no evidence that globalization might have deepened income inequality in South Africa, particularly in the provinces. Rather, the paper found strong evidence indicating that income distribution is improving, and has become more so, in provinces that have stronger links to the world economy. Strengthening those links appears to result in reductions in inequality.
References
Agnew, J.A. (1987) Place and Politics: The Geographical Mediation of State and Society Allen and Unwin.
Atkinson, A., Piketty, T. and Saez, E. (2011) Top Incomes in the Long Run of History. Journal of Economic Literature, 49:1, 3-71.
Baten, J. and Fraunzhold, U. (2002) Did Partial Globalization Increase Inequality? Did Inequality Stimulate Globalization Backlash? The Case of the Latin American Periphery, 1950-2000. CESifo Working Paper No. 683.
Benar, Hasret (2007) Has Globalization Increased Income Inequality in the MENA Region? International Journal of Economic Perspectives 1:4, 183-192.
Bergh, A. and Nilsson, Therese (2010a) Do Liberalization and Globalization Increase Income Inequality? European Journal of Political Economy, 26:4, 488-505.
Bergh, Andreas and Nilsson, Therese (2010b) Good for Living? On the Relationship between Globalization and Life Expectancy. World Development, 38:9, 1191-1203.
Beyer, H., Rojas, P. and Vergara, R. (1999) Trade Liberalization and Wage Inequality. Journal of Development Economics, Elsevier, 59:1, 103-123.
Bhagwati, J. and Dehejia, V. (1994) Freer Trade and Wages of the Unskilled, in Bhagwati, J. and Kosters, M. (eds.) Trade and Wages: Leveling Wages Down? The AEI Press, Washington, DC.
Birdsall, N. (2007) Discussion of the Impact of Globalization on the World’s Poor, ed. by Machiko Nissanke and Erik Thorbecke, Brookings Institution, Washington.
Birdsall, N., Ross, D. and Sabot, R. (1995) Inequality and Growth Reconsidered: Lessons from East Asia. World Bank Economic Review 9:3, 477-508.
Blanchard, O. and Giavazzi, F. (2003) Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets. The Quarterly Journal of Economics 118:3, 879-907.
Borjas, G. (1994) The Economics of Immigration. Journal of Economic Literature 32:4, 1667-1717.
orjas, G. (1999) Immigration and Welfare Magnets. Journal of Labor Economics, 17:4, 607-637.
Borraz, Fernando and Lopez-Cordova, J.E. (2007) Has Globalization Deepened Income Inequality in Mexico? Global Economy Journal 7:1, 1-57.
Calderón, C. and Chong, A. (2004) Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation. Review of Income and Wealth, 50:1, 87-106, International Association for Research in Income and Wealth.
Choi, Changkyu (2006) Does Foreign Direct Investment Affect Domestic Income Inequality? Applied Economics Letters, 13:12, 811-814.
Cornia, Giovanni A. & Kiiski, Sampsa (2001) Trends in Income Distribution in the Post-World War II Period Evidence and Interpretation. Working Paper Series UNU-WIDER Research Paper, World Institute for Development Economic Research.
Cornia, Giovanni A. and Martorano, Bruno (2013) Development Policies and Income Inequality in Selected Developing Regions, 1980-2010. Working Papers-Economics wp2013_13.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa (DISEI).
Daly, Mary C. and Valletta, Robert G. (2006) Inequality and Poverty in United States: The Effects of Rising Dispersion of Men's Earnings and Changing Family Behavior. Economica 73:289, 75-98. London School of Economics and Political Science.
Dollar, D. and Kraay, A. (2004) Trade, Growth, and Poverty. The Economic Journal 114:493, F22-F49.
Du Plessis, Stan and Smit, Ben (2006). Economic Growth in South Africa since 1994., Stellenbosch University, Department of Economics. Working Papers 01/2006.
ECLAC (2001) Economic Survey of Latin America and the Caribbean 2000-2001
Edwards, S. (1997) Trade Policy, Growth, and Income Distribution. American Economic Review 87:2, 205-210.
Forsyth, Justin (2000) Growth and the Poor. The Economist (June 20-27), p. 6
Freeman, R. (2012) What Can Latin America Learn from China's Labor Market Reforms? Mimeograph, Harvard University, February.
Freeman, Richard B. and Katz, Lawrence F. (1994) Rising Wage Inequality: The United States vs. Other Advanced Countries, in R. Freeman, ed., Working Under Different Rules. New York: Russell Sage Foundation.
Ghosh, B.N. and Benar, Hasrat (2006) Has Globalization Decreased Income Inequality in India? Published in Globalization Human Degradation and Unequal Competition 2006. Leeds [u.a.]: Wisdom House Academic Publishers, ISBN 1842900706 pp. 76-82.
Harrison, Ann and Hanson, Gordon (1999) Trade Liberalization and Wage Inequality in Mexico ILR Review 52:2, 271-288.
Hennighausen, Tanja (2014) Globalization and Income Inequality: The Role of Transmission Mechanisms. LIS Working Paper Series No. 610
Hyslop, Dean R. (2001) Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings. American Economic Review, 91(4): 755-777, September.
IMF (2007) Globalization and Inequality. World Economic Outlook, IMF, Washington, pp. 31-65, October.
Jalloh, Abdul Aziz (2003) The Challenges of Globalization to Democratic Governance in Africa: What Role for Society and Other Stakeholders? Proceedings of the 7th Annual Conference of the Developmental Management Forum (DPMF), Addis Ababa, 2-4 December, 2002.
James J. (2002) Technology, Globalization and Poverty. Edward Elgar, Cheltenham, UK.
Kanbur, R., Rhee, C. and Zhuang, J. (2014) Inequality in Asia and the Pacific: Trends, Drivers and Policy Implications. Manila: Asian Development Bank; and London: Routledge.
Kayizzi-Mugerwa, S. (2001) Globalisation, Growth and Income Inequality: The African Experience. OECD Development Centre Working Papers 186, OECD Publishing.
Kuznets, Simon (1955) Economic Growth and Income Inequality.
American Economic Review, 45:1, 1-28. March.
Lall, S., Jaumotte, F., Papageorgiou, C. and Topalova, P. (2007) Globalization and Inequality. World Economic Outlook, Chapter IV, pp. 135-169, October 2007.
Lawrence, Robert, Z. (1994) The Impact of Trade on OECD Labor Markets. Group of Thirty, Occasional Paper No. 45, Washington, D.C.
Leibbrandt, Murray and Levinsohn, James (2014) Fifteen Years On: Household Incomes in South Africa. NBER Chapters, in: African Successes: Government and Institutions, Volume 1 National Bureau of Economic Research, Inc.
Lerman, Robert I. and Yitzhaki, Shlomo (1984) A Note on the Calculation and Interpretation of the Gini Index. Economics Letters, 15:3-4, 363-368.
Levine, M.V. (1995). Globalization and Wage Polarization in U.S. and Canadian Cities: Does Public Policy Make a Difference? In P.K. Kresl and G. Gappert (Eds.) North American Cities and the Global Economy: Challenges and Opportunities. (pp.89-111). Thousand Oaks, CA: Sage Publications (Urban Affairs Annual Review 44).
Li, H., Squire, L. and Zou, H. (1998) Explaining International and Intertemporal Variation in Income Inequality. Economic Journal 108:446, 26-43.
Lindert, Peter H. and Williamson, Jeffrey G. (2003) Does Globalization Make the World More Unequal? NBER Chapters, in: Globalization in Historical Perspective, pp. 227-276 National Bureau of Economic Research, Inc.
Lundbergh, M. and Squire, L. (2003) The Simultaneous Evolution of Growth and Inequality. Economic Journal 113:487, 326-344.
Mah, Jai S. (2002) The Impact of Globalization on Income Distribution: The Korean Experience. Applied Economics Letters, 9:15, 1007-1009.
Manasse, Paolo and Turrini, Alessandro (2001) Trade, Wages, and 'Superstars'. Journal of International Economics 54:1, 97-117.
Meschi, Elena and Vivarelli, Marco (2009) Trade and Income Inequality in Developing Countries. World Development, 37:2, 287-302. February.
Milanovic, Branko (1997) A Simple Way to Calculate the Gini Coefficient, and Some Implications. Economics Letters, 56:1, 45-49. September.
Milanovic, Branko, (2003) The Two Faces of Globalization: Against Globalization as We Know It. World Development, 31:4, 667-683. April.
Milanovic, B. and Squire, L. (2007) Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence. NBER Chapters, in: Globalization and Poverty, pages 143-182
Miller, Tracy C. (2001) Impact of Globalization On U.S. Wage Inequality: Implications for Policy. North American Journal of Economics and Finance 12:3, 219-242.
Odedokun, M.O. and Round, Jeffrey I. (2004) Determinants of Income Inequality and its Effects on Economic Growth: Evidence from African Countries. African Development Review 16:2, 287-327.
OECD (2008) Growing Unequal? Income Distribution in OECD Countries.
OECD Publishing, Paris.
OECD (2010) OECD Employment Outlook. OECD Publishing, Paris.
OECD (2011) Divided We Stand: Why Inequality Keeps Rising. OECD Publishing, Paris.
Prados de la Escosura, L. (2004) When Did Latin America Fall Behind? Evidence from Long-Run International Inequality. Working Papers in Economic History 04-66, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
Paes de Barros, R., Ferreira, F., Molinas Vega, J., and Chanduvi, J. (2008) Measuring Inequality of Opportunities in Latin America and the Caribbean. Palgrave Macmillan
Ravallion, Martin (2003) Inequality Convergence. Economics Letters 80:3, 351-356.
Robertson, Raymond (2000) Wage Shocks and North American Labor Market Integration. American Economic Review 90:4, 742-764. September.
Robertson, Raymond (2004) Relative Prices and Wage Inequality: Evidence from Mexico. Journal of International Economics 64:2, 387–409.
Son, H. H. (2013) Inequality of Human Opportunities in Developing Asia. Asian Development Review 30:2, 110−130.
Spilimbergo, A., Londono, J.L. & Szekely, M. (1999) Income Distribution, Factor Endowments and Trade Openness. Journal of Development Economics 59:1, 77-101.
The Economist (2000a) The Case for Globalization. Sept. 23rd
The Economist (2000b) Growth Is Good. May 27th
Ucal, Meltem, Bilgin, Mehmet H. and Haug, Alfred A. (2014) Income Inequality and FDI: Evidence with Turkish Data. MPRA Paper 61104, University Library of Munich, Germany.
Wade, R. (2011) Global Trends in Income Inequality, Challenge, 54:5, 54-75.
Wilson, F. (2011) Historical Roots of Inequality in South Africa. Economic History of Developing Regions, 26:1, 1-15.
Wood, A. (1994) Give Heckscher and Ohlin a Chance! Review of World Economics 130:1, 20-49, March. (Weltwirtschaftliches Archiv), Springer.
World Bank (2006) Equity and Development World Development Report 2006. Washington.
World Bank (2010) Did Latin America Learn to Shield its Poor from Economic Shocks? World Bank LAC, Washington D.C., October.
World Bank (2013) World Development Indicators: Distribution of Income or Consumption.
World Bank (2014) Economics of South African Townships.
World Income Inequality Database, 2005, United Nations University—
World Institute for Development Economic Research (WIDER).
Yitzhaki, Shlomo (1994) Economic Distance and Overlapping of Distributions. Journal of Econometrics 61:1, 147-159.
Zhou, L., Biswas, B., Bowles, T. and Saunders, P.J. (2011) Impact of Globalization on Income Distribution Inequality in 60 Countries. Global Economy Journal 11:1, 1-16.
Zhuang, J. and Ali, I. (2010) Poverty, Inequality and Inclusive Growth in Asia. In J. Zhuang, ed. Poverty, Inequality and Inclusive Growth: Measurement, Policy Issues, and Country Studies. A co-publication of Anthem Press and the Asian Development Bank.
Atkinson, A., Piketty, T. and Saez, E. (2011) Top Incomes in the Long Run of History. Journal of Economic Literature, 49:1, 3-71.
Baten, J. and Fraunzhold, U. (2002) Did Partial Globalization Increase Inequality? Did Inequality Stimulate Globalization Backlash? The Case of the Latin American Periphery, 1950-2000. CESifo Working Paper No. 683.
Benar, Hasret (2007) Has Globalization Increased Income Inequality in the MENA Region? International Journal of Economic Perspectives 1:4, 183-192.
Bergh, A. and Nilsson, Therese (2010a) Do Liberalization and Globalization Increase Income Inequality? European Journal of Political Economy, 26:4, 488-505.
Bergh, Andreas and Nilsson, Therese (2010b) Good for Living? On the Relationship between Globalization and Life Expectancy. World Development, 38:9, 1191-1203.
Beyer, H., Rojas, P. and Vergara, R. (1999) Trade Liberalization and Wage Inequality. Journal of Development Economics, Elsevier, 59:1, 103-123.
Bhagwati, J. and Dehejia, V. (1994) Freer Trade and Wages of the Unskilled, in Bhagwati, J. and Kosters, M. (eds.) Trade and Wages: Leveling Wages Down? The AEI Press, Washington, DC.
Birdsall, N. (2007) Discussion of the Impact of Globalization on the World’s Poor, ed. by Machiko Nissanke and Erik Thorbecke, Brookings Institution, Washington.
Birdsall, N., Ross, D. and Sabot, R. (1995) Inequality and Growth Reconsidered: Lessons from East Asia. World Bank Economic Review 9:3, 477-508.
Blanchard, O. and Giavazzi, F. (2003) Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets. The Quarterly Journal of Economics 118:3, 879-907.
Borjas, G. (1994) The Economics of Immigration. Journal of Economic Literature 32:4, 1667-1717.
orjas, G. (1999) Immigration and Welfare Magnets. Journal of Labor Economics, 17:4, 607-637.
Borraz, Fernando and Lopez-Cordova, J.E. (2007) Has Globalization Deepened Income Inequality in Mexico? Global Economy Journal 7:1, 1-57.
Calderón, C. and Chong, A. (2004) Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation. Review of Income and Wealth, 50:1, 87-106, International Association for Research in Income and Wealth.
Choi, Changkyu (2006) Does Foreign Direct Investment Affect Domestic Income Inequality? Applied Economics Letters, 13:12, 811-814.
Cornia, Giovanni A. & Kiiski, Sampsa (2001) Trends in Income Distribution in the Post-World War II Period Evidence and Interpretation. Working Paper Series UNU-WIDER Research Paper, World Institute for Development Economic Research.
Cornia, Giovanni A. and Martorano, Bruno (2013) Development Policies and Income Inequality in Selected Developing Regions, 1980-2010. Working Papers-Economics wp2013_13.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa (DISEI).
Daly, Mary C. and Valletta, Robert G. (2006) Inequality and Poverty in United States: The Effects of Rising Dispersion of Men's Earnings and Changing Family Behavior. Economica 73:289, 75-98. London School of Economics and Political Science.
Dollar, D. and Kraay, A. (2004) Trade, Growth, and Poverty. The Economic Journal 114:493, F22-F49.
Du Plessis, Stan and Smit, Ben (2006). Economic Growth in South Africa since 1994., Stellenbosch University, Department of Economics. Working Papers 01/2006.
ECLAC (2001) Economic Survey of Latin America and the Caribbean 2000-2001
Edwards, S. (1997) Trade Policy, Growth, and Income Distribution. American Economic Review 87:2, 205-210.
Forsyth, Justin (2000) Growth and the Poor. The Economist (June 20-27), p. 6
Freeman, R. (2012) What Can Latin America Learn from China's Labor Market Reforms? Mimeograph, Harvard University, February.
Freeman, Richard B. and Katz, Lawrence F. (1994) Rising Wage Inequality: The United States vs. Other Advanced Countries, in R. Freeman, ed., Working Under Different Rules. New York: Russell Sage Foundation.
Ghosh, B.N. and Benar, Hasrat (2006) Has Globalization Decreased Income Inequality in India? Published in Globalization Human Degradation and Unequal Competition 2006. Leeds [u.a.]: Wisdom House Academic Publishers, ISBN 1842900706 pp. 76-82.
Harrison, Ann and Hanson, Gordon (1999) Trade Liberalization and Wage Inequality in Mexico ILR Review 52:2, 271-288.
Hennighausen, Tanja (2014) Globalization and Income Inequality: The Role of Transmission Mechanisms. LIS Working Paper Series No. 610
Hyslop, Dean R. (2001) Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings. American Economic Review, 91(4): 755-777, September.
IMF (2007) Globalization and Inequality. World Economic Outlook, IMF, Washington, pp. 31-65, October.
Jalloh, Abdul Aziz (2003) The Challenges of Globalization to Democratic Governance in Africa: What Role for Society and Other Stakeholders? Proceedings of the 7th Annual Conference of the Developmental Management Forum (DPMF), Addis Ababa, 2-4 December, 2002.
James J. (2002) Technology, Globalization and Poverty. Edward Elgar, Cheltenham, UK.
Kanbur, R., Rhee, C. and Zhuang, J. (2014) Inequality in Asia and the Pacific: Trends, Drivers and Policy Implications. Manila: Asian Development Bank; and London: Routledge.
Kayizzi-Mugerwa, S. (2001) Globalisation, Growth and Income Inequality: The African Experience. OECD Development Centre Working Papers 186, OECD Publishing.
Kuznets, Simon (1955) Economic Growth and Income Inequality.
American Economic Review, 45:1, 1-28. March.
Lall, S., Jaumotte, F., Papageorgiou, C. and Topalova, P. (2007) Globalization and Inequality. World Economic Outlook, Chapter IV, pp. 135-169, October 2007.
Lawrence, Robert, Z. (1994) The Impact of Trade on OECD Labor Markets. Group of Thirty, Occasional Paper No. 45, Washington, D.C.
Leibbrandt, Murray and Levinsohn, James (2014) Fifteen Years On: Household Incomes in South Africa. NBER Chapters, in: African Successes: Government and Institutions, Volume 1 National Bureau of Economic Research, Inc.
Lerman, Robert I. and Yitzhaki, Shlomo (1984) A Note on the Calculation and Interpretation of the Gini Index. Economics Letters, 15:3-4, 363-368.
Levine, M.V. (1995). Globalization and Wage Polarization in U.S. and Canadian Cities: Does Public Policy Make a Difference? In P.K. Kresl and G. Gappert (Eds.) North American Cities and the Global Economy: Challenges and Opportunities. (pp.89-111). Thousand Oaks, CA: Sage Publications (Urban Affairs Annual Review 44).
Li, H., Squire, L. and Zou, H. (1998) Explaining International and Intertemporal Variation in Income Inequality. Economic Journal 108:446, 26-43.
Lindert, Peter H. and Williamson, Jeffrey G. (2003) Does Globalization Make the World More Unequal? NBER Chapters, in: Globalization in Historical Perspective, pp. 227-276 National Bureau of Economic Research, Inc.
Lundbergh, M. and Squire, L. (2003) The Simultaneous Evolution of Growth and Inequality. Economic Journal 113:487, 326-344.
Mah, Jai S. (2002) The Impact of Globalization on Income Distribution: The Korean Experience. Applied Economics Letters, 9:15, 1007-1009.
Manasse, Paolo and Turrini, Alessandro (2001) Trade, Wages, and 'Superstars'. Journal of International Economics 54:1, 97-117.
Meschi, Elena and Vivarelli, Marco (2009) Trade and Income Inequality in Developing Countries. World Development, 37:2, 287-302. February.
Milanovic, Branko (1997) A Simple Way to Calculate the Gini Coefficient, and Some Implications. Economics Letters, 56:1, 45-49. September.
Milanovic, Branko, (2003) The Two Faces of Globalization: Against Globalization as We Know It. World Development, 31:4, 667-683. April.
Milanovic, B. and Squire, L. (2007) Does Tariff Liberalization Increase Wage Inequality? Some Empirical Evidence. NBER Chapters, in: Globalization and Poverty, pages 143-182
Miller, Tracy C. (2001) Impact of Globalization On U.S. Wage Inequality: Implications for Policy. North American Journal of Economics and Finance 12:3, 219-242.
Odedokun, M.O. and Round, Jeffrey I. (2004) Determinants of Income Inequality and its Effects on Economic Growth: Evidence from African Countries. African Development Review 16:2, 287-327.
OECD (2008) Growing Unequal? Income Distribution in OECD Countries.
OECD Publishing, Paris.
OECD (2010) OECD Employment Outlook. OECD Publishing, Paris.
OECD (2011) Divided We Stand: Why Inequality Keeps Rising. OECD Publishing, Paris.
Prados de la Escosura, L. (2004) When Did Latin America Fall Behind? Evidence from Long-Run International Inequality. Working Papers in Economic History 04-66, Universidad Carlos III, Instituto Figuerola de Historia y Ciencias Sociales.
Paes de Barros, R., Ferreira, F., Molinas Vega, J., and Chanduvi, J. (2008) Measuring Inequality of Opportunities in Latin America and the Caribbean. Palgrave Macmillan
Ravallion, Martin (2003) Inequality Convergence. Economics Letters 80:3, 351-356.
Robertson, Raymond (2000) Wage Shocks and North American Labor Market Integration. American Economic Review 90:4, 742-764. September.
Robertson, Raymond (2004) Relative Prices and Wage Inequality: Evidence from Mexico. Journal of International Economics 64:2, 387–409.
Son, H. H. (2013) Inequality of Human Opportunities in Developing Asia. Asian Development Review 30:2, 110−130.
Spilimbergo, A., Londono, J.L. & Szekely, M. (1999) Income Distribution, Factor Endowments and Trade Openness. Journal of Development Economics 59:1, 77-101.
The Economist (2000a) The Case for Globalization. Sept. 23rd
The Economist (2000b) Growth Is Good. May 27th
Ucal, Meltem, Bilgin, Mehmet H. and Haug, Alfred A. (2014) Income Inequality and FDI: Evidence with Turkish Data. MPRA Paper 61104, University Library of Munich, Germany.
Wade, R. (2011) Global Trends in Income Inequality, Challenge, 54:5, 54-75.
Wilson, F. (2011) Historical Roots of Inequality in South Africa. Economic History of Developing Regions, 26:1, 1-15.
Wood, A. (1994) Give Heckscher and Ohlin a Chance! Review of World Economics 130:1, 20-49, March. (Weltwirtschaftliches Archiv), Springer.
World Bank (2006) Equity and Development World Development Report 2006. Washington.
World Bank (2010) Did Latin America Learn to Shield its Poor from Economic Shocks? World Bank LAC, Washington D.C., October.
World Bank (2013) World Development Indicators: Distribution of Income or Consumption.
World Bank (2014) Economics of South African Townships.
World Income Inequality Database, 2005, United Nations University—
World Institute for Development Economic Research (WIDER).
Yitzhaki, Shlomo (1994) Economic Distance and Overlapping of Distributions. Journal of Econometrics 61:1, 147-159.
Zhou, L., Biswas, B., Bowles, T. and Saunders, P.J. (2011) Impact of Globalization on Income Distribution Inequality in 60 Countries. Global Economy Journal 11:1, 1-16.
Zhuang, J. and Ali, I. (2010) Poverty, Inequality and Inclusive Growth in Asia. In J. Zhuang, ed. Poverty, Inequality and Inclusive Growth: Measurement, Policy Issues, and Country Studies. A co-publication of Anthem Press and the Asian Development Bank.
Published
2018-01-05
How to Cite
Oladipo, O. (2018). The Relationship between Globalization and Income Inequality in South Africa. Journal of Global Economy, 13(4), 223-249. https://doi.org/10.1956/jge.v13i4.473
Issue
Section
Articles
