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In Analysis of Effects of Globalization on Inequality in Latin America, Researchers Highlight Recent Results and Call for Unifying Frameworks to Synthesize Findings

In a new working paper, researchers survey recent research on the effects of globalization on inequality in Latin America and propose areas for future research. They highlight recent findings showing how globalization affects a broad array of outcomes and influences various dimensions of inequality.  They conclude by recommending researchers develop unifying frameworks to help synthesize the findings from individual studies that focus on distinct aspects of the relation between globalization and inequality.

The analysis, by researchers at Carnegie Mellon University (CMU) and Duke University, appears as a working paper in the Latin America and Caribbean Inequality Review.

“We focused our attention on research covering Latin American countries, which play an outsized role in the study of globalization’s impacts, primarily because they deliver a combination of policy variation and data availability that facilitates careful empirical research,” explains Brian K. Kovak, professor of economics and public policy at CMU’s Heinz College, who coauthored the paper.

Focusing on research from the late 2000s onward, the analysis emphasizes empirical work that considered new mechanisms, examined new dimensions of inequality, and developed new methods to capture the many facets of globalization’s relation to inequality. Studies have documented several important regularities regarding the effects of globalization on inequality in the region that appear to apply broadly across a range of contexts, including:

  • Trade liberalization and other globalization shocks tended to drive long-lasting disruptions in labor markets, with periods of heightened relative unemployment and persistent relative increases in informality.

  • Globalization influenced inequality across industries, locations, firms, education levels, races, genders, and other worker characteristics, and affected many outcomes beyond the labor market, including consumption, education, health, crime, and political outcomes.

The paper concludes with recommendations for future research. Given the evidence that globalization has generated winners and losers across a variety of dimensions (e.g., education, location, industry), the authors encourage research on policies to compensate those harmed by globalization. More broadly, they encourage researchers to develop unifying frameworks that incorporate the many mechanisms, inequality dimensions, and time horizons studied in individual studies.

“Studies have generated new insights into how globalization affects various dimensions of inequality, but broad conclusions remain elusive,” says Rafael Dix-Carneiro, associate professor of economics at Duke University, who coauthored the study. “These dimensions need to be synthesized in consistent analytical frameworks to help sharpen our understanding of the complex relations between globalization and inequality.”

The analysis was funded by the Inter-American Development Bank, the International Inequalities Institute at the London School of Economics and Political Science, Yale University, and the Institute for Fiscal Studies.


Summarized from a Latin America and Caribbean Inequality Review working paper, "Globalisation and Inequality in Latin America" by Dix-Carneiro, R (Duke University), and Kovak, BK (Carnegie Mellon University). Copyright 2023 The Authors. All rights reserved.

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