Title: Globalization and Inequality: Sharing Wealth One of Greatest Challenges
Headings: Globalization and Inequality: Sharing Wealth One of Society’s Greatest Challenges
Globalization and Inequality: Sharing Wealth One of Society’s Greatest Challenges
Why is Inequality Increasing?
Changing Employment
Regional Inequality
William R. Hauk

Content: The upshot of this literature is that international trade presents more opportunities for the most productive firms in an industry. As trade barriers fall, high-productivity firms will be best positioned to take advantage of markets overseas. However, less-productive firms will likely be crowded out of an industry due to the expansion of their more productive competitors as well as imports. As a practical matter, “high-productivity” firms typically have disproportionately more high-skilled workers and high-tech capital than less productive firms. Thus, while an industry does not necessarily need a change in its overall level of employment, exposure to international trade might change the composition of its employment. More trade tends to benefit the firms that employ the most high-skilled workers while hurting their less-skilled counterparts. Regional Inequality
Also receiving attention in recent research is the extent to which some of these trade-induced changes can create regional inequality. Pioneering work by economists David Autor, David Dorn, and Gordon Hanson has shown that increased exposure to trade with China created large and persistent shocks to areas of the United States where import-competing firms were located. In short, the relevant question does not seem to be whether globalization or technological change is increasing income inequality in the United States. They seem to be complementary, rather than competing explanations.