The Relationship Between Globalization and Income Distribution

Abstract

Income inequality is a major economic problem in many countries, and it is clear that numerous parameters affect income distribution. In this study, the effects of globalization on income distribution were examined in the contexts of South Korea and the Kuznets curve between 1970 and 2010. The cointegration test of the series was carried out using the Maki approach, which considers multiple structural breaks. The cointegration test indicated the series moved together in the long term. The long-term analysis indicated that globalization first reduces income inequality and then increases it in a U-shaped relationship. In the short-term analysis, it was found that the error correction term was negative and statistically significant. In this context, it is crucial that policy makers develop policies that minimize the impact of globalization on income inequality; otherwise, social and economic distortions will increase with the increase in globalization, which will cause different socioeconomic problems.