Inequality and globalisation: Analysis of European countries

Abstract

This paper examines the relationship between income inequality and globalisation in 29 European countries over the period of 2005-2015, the period including phases of both growth and economic recession. Unlike other studies which analyse variations in inequality in specific countries or in both developed and developing economies, this study focuses on European countries, that is, high-income countries with highly developed economies. It investigates the influence on inequality exerted by trade and financial globalisation and technological development over the ten years through panel data multiple regression analysis. The results indicate that both trade globalisation and the degree of technological development are associated with reduction in inequality, while financial globalisation, and particularly foreign direct investment inward, are associated with increase in inequality. Furthermore, strong associations can be observed between the dimensions of the study in function of the average salaries and GDP per capita of different countries, reflected through partial correlations.