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Content: Moreover, in many poor countries, even relatively old technologies are only available in selected locales and to elites, or used only by a few firms. Thus much of the technology adoption that contributes to wage convergence is actually about bringing backward regions, inefficient firms, and disadvantaged groups up to the level of the more advanced in the same country. Globalization of the Labor Market and Income Distribution
These forces of globalization have been associated with both rising living standards and a deterioration in income distribution in advanced countries: Low-skilled wages have remained flat or even declined, while high-skilled wages have increased sharply. Labor income fell as a share of GDP by 3.5 percentage points from 1993 to 2009. And Gini coefficients, which provide an aggregate measure of income inequality, rose from the mid-1980s to the mid-2000s in all G-7 countries except France. Inequality also has increased in many developing countries. According to the International Labor Organization, of the 28 developing countries for which data are available, 21 experienced increased income inequalityfrom the early 1990s to the mid-2000s. As in advanced countries, openness to trade and foreign investment have increased the relative return to skilled labor and capital, while reducing the relative return to unskilled labor. Indeed, someanalysesfind that trade and financial liberalization episodes, or openness in general, have contributed to worsening income inequality, at least in the middle-income countries.