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The impact of globalization and financial development on India’s income inequality

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  • Sethi, Pradeepta
  • Bhattacharjee, Sankalpa
  • Chakrabarti, Debkumar
  • Tiwari, Chhavi

Abstract

This paper empirically examines the combined effects of globalization and financial development on income inequality in a unified framework for an emerging economy. Using annual data for the Indian economy over the period 1980–2014, we show that the perceived benefits of globalization and financial development have not trickled down; rather, has aggravated income inequality. Our results also indicate that while inflation aggravates income inequality, education seems to alleviate the differential effect. Proactive measures in providing access to financial services, creating equitable employment opportunities, and improving the quality of education are required to offset the negative impacts of globalization and financial development on income disparity.

Suggested Citation

  • Sethi, Pradeepta & Bhattacharjee, Sankalpa & Chakrabarti, Debkumar & Tiwari, Chhavi, 2021. "The impact of globalization and financial development on India’s income inequality," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 639-656.
    • Handle: RePEc:eee:jpolmo:v:43:y:2021:i:3:p:639-656
    DOI: 10.1016/j.jpolmod.2021.01.002
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    More about this item

    Keywords

    India; Income inequality; Globalization; Financial development;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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