Globalization and Inequality in Advanced Economies: Trade, Tax Base Mobility, and Policy Implications

Description

This volume surveys and combines the different dimensions of globalization so as to propose a general diagnosis of the way they interact to explain growing inequality in advanced economies. The extant economic literature has widely analyzed (i) the impact on inequality of trade between advanced and emerging countries (North-South Trade), particularly offshoring, (ii) the impact of tax base mobility on tax competition and (iii) the globalization-driven constraints on social policies and labor market institutions. Those three strands of analysis and the related literature have been reviewed in a number of surveys but have not been combined to provide an extensive study of the impact of their interactions on inequality. This volume fills that gap. Providing a general diagnosis of the globalization-inequality nexus within advanced economies and opening new avenues for research and potential reforms, this book will be of interest to researchers and students of economics and the social sciences. Introduction Contents Acronyms List of Figures Chapter 1: Globalization and Inequality: The Facts 1.1 Trade, Offshoring, FDI and Inequality 1.1.1 Changes in Trade Structure 1.1.2 FDI and Multinationalization of Firms 1.1.3 Patterns of Rising Inequality 1.2 Migration, Mobility of Tax Bases and Decrease in Tax Progressivity 1.2.1 Decrease in Mobility Costs 1.2.2 Immigration 1.2.3 Changes in the Tax Structures 1.3 Public Social Expenditure and Public Debt 1.3.1 General Increase in Public Social Expenditures 1.3.2 Changes in Redistribution 1.3.3 Increase in Public Debts 1.4 Unemployment, Skill Endowment and Labour Market Rigidity 1.4.1 Unemployment 1.4.2 Skill Endowment 1.4.3 Labour Cost and Labour Market Rigidities 1.4.3.1 Difference in Labour Costs Between Advanced and Emerging Countries 1.4.3.2 Labour Market Institutions 1.5 Major Stylized Facts Chapter 2: Trade and Inequality 2.1 Comparative Advantage, North-South Trade and Inequality 2.1.1 The North-South Heckscher-Ohlin Approach and its Shortcomings 2.1.1.1 The Basic NS-HOS Model and Inequality 2.1.1.2 Unconfirmed Predictions 2.1.2 Divergence in Factor Endowments, Non-equalization in Factor Price and Stages of Globalization 2.1.3 Differences in Productivity and Technology 2.1.4 Labour Market Failures and Unemployment 2.1.4.1 Institutional Constraint and the Inequality-Unemployment Trade-Off 2.1.4.2 Impact of a Minimum Wage and Extension to Downward-Rigid Wages 2.1.4.3 North-South Trade, Efficiency Wage and Unemployment 2.1.5 A Large Number of Countries and Sectors 2.1.6 Capital and Capital Mobility 2.2 Offshoring and Global Value Chains 2.2.1 Offshoring in Intermediate Goods 2.2.2 Offshoring in Individual Tasks 2.3 Trade and Technology Interplay 2.3.1 Capital-Skill Complementarity 2.3.2 Property Rights Enforcement and Globalization-Driven-Biased Technical Change 2.4 Polarization 2.4.1 Skill Upgrading in Emerging Countries and Polarization 2.4.2 Globalization-Induced Education Decisions and Polarization 2.4.3 Empirical Evidence 2.5 Globalization and the Superstars 2.6 Empirical Evidence on Trade and Inequality 2.7 Major Lessons on Trade and Inequality Appendices Appendix A: The Basic North-South HOS Model Autarky North-South Openness The Integrated Global Economy The Diversification Cone Appendix B: The NS-HOS Model with Fair Wage North and South Produce Both Goods North Produces Both Goods and South Good l Only North Produces Good h Only Appendix C: The NS-HOS Model with Offshoring Appendix D: A Basic Model with Offshoring in Tasks Unskilled Tasks Are Produced in Both Areas The North Skill Premium Prices Real Wages The Real Income per Head Unskilled Tasks Are only Produced in the South Labour Market Imperfections Chapter 3: Factor Mobility, Tax Base Mobility and Tax Competition 3.1 Mobility of Tax Bases, Tax Competition and Race to the Bottom 3.1.1 Mobility of Tax Bases and Globalization 3.1.2 Tax Competition and Race to the Bottom 3.2 Corporate Tax Competition 3.2.1 Theoretical Approaches 3.2.2 Empirical Evidence 3.3 Income Tax Competition 3.3.1 Theoretical Approaches 3.3.2 Empirical Evidence 3.4 Tax Evasion 3.4.1 Tax Evasion: Basic Mechanisms 3.4.2 Tax Evasion: Weight and Impact 3.5 Major Lessons on Tax Base Mobility, Tax Competition and Tax Evasion Appendix: Mobility of Tax Bases and Race to the Bottom Source-Based Taxation Resident-Based Taxation Chapter 4: Anti-inequality Policies and Globalization 4.1 Labour Market Institutions and the Inequality-Unemployment Trade-Off 4.1.1 The Inequality-Unemployment Trade-Off 4.1.2 Globalization and Unionization 4.2 Progressivity-Redistribution Trade-Off, Middle-Class Curse and Social Democracy Curse 4.2.1 Middle-Class Curse and the Progressivity-Redistribution Trade-Off 4.2.2 Social Democracy Curse and the Rise of Populism 4.3 Public Deficit and Debt 4.4 Globalization, Education and Inequality 4.4.1 The `Incentive Effect´ 4.4.2 The `Cost of Education´ Effect 4.4.3 Total Effect and Policy Implications 4.5 Major Lessons on Globalization and Anti-inequality Policies Appendices Appendix A: The Monopoly Union Model Appendix B: The Efficient Bargaining Model Bargaining Without Globalization Bargaining with Globalization Appendix C: Impact of Globalization on Education Chapter 5: Further Researches and Policy Implications 5.1 General Diagnosis and Implications for Researches 5.1.1 General Diagnosis 5.1.2 Implication for Researches on the Globalization-Inequality Relationship 5.1.2.1 Trade and FDI 5.1.2.2 Other Components of Globalization 5.1.2.3 Synthetic Indicators of Globalization and Meta-analyses 5.1.2.4 Changing Policies and Institutions and Alternatives to Inequality 5.2 New Fields of Research 5.2.1 Posted Workers 5.2.2 Global Value Chains and Increasing Economic Risks 5.2.3 Education and the Emergence of a Globalized Elite 5.3 Globalization-Consistent Public Policies 5.3.1 Conditional Provision of Public Services and Social Advantages 5.3.2 Globalization-Consistent Taxation Conclusion References Author Index Subject Index