Globalization and Its Effect on Income Inequality

Abstract

This study investigates the intricate relationship between globalization and income inequality by employing a mixed-methods research design that integrates econometric modeling with qualitative thematic analysis. Using panel data from 50 countries between 2018 and 2021, globalization was measured across economic, social, and political dimensions, while inequality was assessed through Gini coefficients, income shares, and the Palma ratio. Quantitative results reveal heterogeneous outcomes: in several developing economies, trade openness and foreign direct investment contributed to reducing inequality, whereas in advanced and emerging economies, globalization disproportionately benefited capital and high-skilled labor, thereby exacerbating disparities. Regression analysis confirmed significant associations, with institutional quality emerging as a key mediator in shaping distributive outcomes. The application of two-stage least squares techniques addressed potential endogeneity, reinforcing the robustness of the findings. Complementary qualitative evidence, derived from policy documents and secondary interviews, underscored recurring themes of labor market vulnerability, weakened social protections, and uneven policy adaptation. Visualization of results through complex tables, regression outputs, and multidimensional figures further highlighted regional heterogeneity in globalization’s effects. The study concludes that globalization is neither uniformly detrimental nor uniformly beneficial for inequality; rather, its distributive consequences depend critically on domestic policy frameworks, institutional resilience, and socio-economic context. These findings underscore the urgency of designing context-sensitive strategies—such as progressive taxation, enhanced education systems, and robust social protection mechanisms—to ensure that globalization serves as a catalyst for inclusive development rather than a driver of entrenched disparity.