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Can Social Spending Cushion the Inequality Effect of Globalization?

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This paper examines whether social spending cushions the effect of globalization on within-country inequality. Using information on disposable and market income inequality and data on overall social spending, and health and education spending from the ILO and the World Bank/WHO, we analyze whether social spending moderates the association between economic globalization and inequality. The results confirm that economic globalization – especially economic flows – associates with higher income inequality, an effect driven by non-OECD countries. Health spending is strongly associated with lower inequality, but we find no robust evidence that any kind of social spending negatively moderates the association between economic globalization and inequality.

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  • Bergh, Andreas & Mirkina, Irina & Nilsson, Therese, 2019. "Can Social Spending Cushion the Inequality Effect of Globalization?," Working Paper Series 1286, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:1286
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    3. Rasmus Wiese & João Tovar Jalles & Jakob de Haan, 2024. "Structural reforms and income distribution: new evidence for OECD countries," Oxford Economic Papers, Oxford University Press, vol. 76(4), pages 1071-1088.
    4. Björn Kauder & Manuela Krause & Niklas Potrafke, 2021. "Do Left-wing Governments Decrease Wage Inequality among Civil Servants? Empirical Evidence from the German States," Public Finance Review, , vol. 49(1), pages 106-135, January.
    5. Atta Ullah & Zhao Kui & Saif Ullah & Chen Pinglu & Saba Khan, 2021. "Sustainable Utilization of Financial and Institutional Resources in Reducing Income Inequality and Poverty," Sustainability, MDPI, vol. 13(3), pages 1-25, January.
    6. Florian Haelg & Niklas Potrafke & Jan-Egbert Sturm, 2022. "The determinants of social expenditures in OECD countries," Public Choice, Springer, vol. 193(3), pages 233-261, December.
    7. Hiroyuki Takeshima, 2024. "Public Expenditure’s Role in Reducing Poverty and Improving Food and Nutrition Security: Cross-Country Evidence from SPEED Data," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(5), pages 1045-1073, October.

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    Keywords

    Globalization; Social spending; Income inequality;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General

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