Dimensions of globalization and income inequality in transition economies: taking into account cross-sectional dependence

Abstract

This study aims to investigate the impact of different globalization dimensions on income inequality for the period from 1991 to 2013 in a panel of 11 transition economies. For this purpose, the relationship between economic, social and political globalization indices and Gini coefficient is examined with second generation panel data methods such as CCE (common correlated effect) estimator and Konya causality procedure to consider the cross-sectional dependence across transition economies. The result reveals that economic globalization negatively correlated with income inequality in China and Russia; social globalization negatively correlated with income inequality in Belarus and Poland; and the political globalization negatively correlated with income inequality in Kazakhstan. In addition, the causality test results show that economic globalization causes income inequality in China, Hungary, Moldova and Russia; social globalization causes income inequality in Hungary, Belarus, Kazakhstan and Poland; and political globalization causes income inequality in Kazakhstan, Poland and Russia.

Keywords

• income inequality
• globalization
• transition economies
• cross-sectional dependence