BY: JEFFREY G. WILLIAMSON
Harvard University
Paper ID: NBER Working Paper 5491
Date: March 1996
Contact: Jeffrey G. Williamson
E-Mail: MAILTO:jwilliam@kuznets.harvard.edu
Postal: Department of Economics, 216 Littauer Center,
Harvard University, Cambridge, MA 02138
Phone: (617) 495-2438
Fax: (617) 495-7730
ERN Ref: HISTORY:WPS96-105
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The late 19th and the late 20th century shared more than
simply globalization and convergence. Globalization also
seems to have had the same impact on income distribution: in
the late 19th century, inequality rose in rich countries and
fell in poor countries; according to Adrian Wood, the same
has been true of the late 20th century. Furthermore, while
George Borjas and Wood think that globalization accounted for
something like a third to a half of the rise in inequality in
America and other OECD countries since the 1970s, the late
19th century evidence suggests at least the same, perhaps
more. However, those modern economists who favor a rising
inequality explanation coming from (unskilled) labor-saving
technological change will be pleased to hear that it probably
accounted for more than a third of the rising inequality in
the New World and for more than a half of the falling
inequality in Europe. It also appears that the inequality
trends which globalization produced prior to World War I
were at least partly responsible for the interwar retreat
from globalization. Will the world economy of the next
century also retreat from its commitment to globalization
because of its inequality side effects?
JEL Classification: N31, N32, N33, N34, J31, J61