TY  - JOUR
AU  - Anderson,James E.
TI  - Globalization and Income Distribution: A Specific Factors Continuum Approach
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14643
PY  - 2009
Y2  - January 2009
UR  - http://www.nber.org/papers/w14643
L1  - http://www.nber.org/papers/w14643.pdf
N1  - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
AB  - Does globalization widen inequality or increase income risk? In the specific factors continuum model of this paper, globalization widens inequality, amplifying the positive (negative) premia for export (import- competing) sectors. Globalization amplifies the risk from idiosyncratic relative productivity shocks but reduces risk from aggregate shocks to absolute advantage, relative endowments and transfers. Aggregate-shock-induced income risk bears most heavily on the poorest specific factors, while non-traded sectors are insulated. Heterogeneous shocks to firms induce Darwinian competition for sector specific factors that is harsher the more productive the sector. Wage bargaining implies within-sector wage dispersion that falls or rises with export intensity depending on the joint distribution of sectoral and firm shocks.
ER  -