Arthur S. Alderson

Globalization and the Great U-Turn: Income Inequality Trends in 16 OECD Countries

The debate on the resurgence of income inequality in some advanced industrial societies has often focused on the impact of an increasingly integrated world economy, typified by growing capital mobility, heightened international competition, and an increase in migration. This study represents one of the first systematic, cross‐national examinations of the role of globalization in the inequality “U-turn.” Results indicate, on the one hand, that total inequality variation is principally affected by the percentage of the labor force in agriculture, followed by the institutional factors union density and decommodification, and only then by globalization. On the other hand, longitudinal variation in inequality, while still dominated by the percentage of the labor force in agriculture, is also principally affected by aspects of globalization, such as southern import penetration and direct investment outflow, and to a lesser extent by migration. In other words, globalization explains the longitudinal trend of increasing inequality that took place within many industrial countries better than it does cross‐sectional inequality differences among countries.

Power and Position in the World City System

Globalization has renewed interest in the place and role of cities in the international system. Recent literature proposes that the fate of cities (and their residents) has become increasingly tied to their position in international flows of investment and trade. Data on the branch locations of the world’s 500 largest multinational enterprises in 2000 are subjected to two broad types of network analytic techniques in order to analyze the “world city system.” First, 3,692 cities are analyzed in terms of three measures of point centrality. Second, blockmodeling techniques are employed to generalize further about the positions and roles played by cities in the system. These techniques are used to trace out the structure of the world city system, locate cities in the context of a global urban hierarchy, and explore the degree to which this diverges from a simple one‐to‐one matching of cities onto nation‐states in the world system.

Income Inequality, Development, and Dependence: A Reconsideration

We reconsider the role of foreign investment in income inequality in light of recent critiques that question the results of quantitative cross-national research on foreign capital penetration. We analyze an unbalanced cross-national data set in which countries contribute different numbers of observations, with a maximum of 88 countries and 488 observations, dated from 1967 to 1994. Random-effects regression models that control for unmeasured country heterogeneity are used to investigate effects of foreign capital penetration on inequality (measured as the Gini coefficient) against the background of an internal-developmental model of inequality. We adapt Firebaughs (1992, 1996) critique of the literature on the effect of foreign investment on economic growth to the study of income inequality and find that the stock of foreign direct investment has an effect on inequality that is independent of the mechanisms identified by Firebaugh. We explore Tsais (1995) claim that the effect of foreign capital penetration is spurious and find that foreign stock has a significant positive effect on inequality net of region-specific differences. An alternative interpretation of the findings of the foreign investment/inequality literature is discussed in light of the discovery of an inverted-U shaped relationship between income inequality and foreign investment stock per capita. We conclude that thinking on the relationship between income inequality and investment dependence should be revised in light of an investment-development path relating the inflow and outflow of foreign capital to economic development.

Explaining Deindustrialization: Globalization, Failure, or Success?

Although sociologists have expressed growing interest in globalization, they have devoted little sustained empirical attention to the many claims made in its name. I focus on the link that has been drawn between globalization and the deindustrialization of the advanced industrial societies. To examine this, I employ a pooled time-series of cross-sections data set that combines observations on 18 OECD nations across the 1968-1992 period. Fixed-effects regression models that control for unmeasured country-specific effects reveal support for arguments that implicate foreign direct investment and North-South trade in the declining percentage of the labor force employed in manufacturing in the OECD countries. Regression results also show that deindustrialization across this period is largely explained by a model that combines an attention to the post-Golden Age troubles of northern manufacturing with classic generalizations of the process of development. Interpretation of the empirical findings is tempered by an exercise in counterfactual history, which reveals that deindustrialization would have been considerable in these countries even if the upswings in direct investment and southern imports had not occurred or if the performance of the manufacturing sector had been stronger

Intercity Relations and Globalisation: The Evolution of the Global Urban Hierarchy, 1981—2007

How is the world city system changing in the context of globalisation? This question is addressed using data on the headquarter and branch locations of the world’s 500 largest multinationals. The paper employs techniques developed for the analysis of networks to evaluate the more than 6300 cities that are linked together by such firms in terms of their point centrality and, using blockmodelling techniques, in terms of the positions they occupy and roles that they play in the system. The analysis indicates that the world city system is in the midst of substantial restructuring and that it is changing in such a way as to concentrate power in a small number of cities. However, in contrast to some accounts, support is not found for the idea that globalisation is generating a ‘new geography of inequality’ at the level of intercity relations.

Changing patterns of income inequality in U.S. counties, 1970-2000.

The upswing in economic inequality that has affected a number of advanced industrial societies in the late 20th century has been particularly conspicuous in the United States. The authors explore its causes using data on the distribution of family income in 3,098 U.S. counties in 1970, 1980, 1990, and 2000. The authors build a model of within‐county income inequality that assumes that distribution processes involving labor market and sociodemographic variables operate primarily at the county level and those involving the political and institutional context operate primarily at the state level. Multilevel methods are used to distinguish county cross‐sectional, state cross‐sectional, and longitudinal effects on inequality. The authors find that, when features of the state‐level institutional and political context are associated with inequality, these effects are larger longitudinally than cross‐sectionally. A range of other factors, including economic development, labor force changes, shifts in the racial/ethnic and gender composition of the labor force, educational expansion, and urbanization are found to have comparatively large effects, both longitudinally and cross‐sectionally.

Exactly how has income inequality changed? : Patterns of distributional change in core societies

The recent resurgence of income inequality in some of the core societies has spawned a wide-ranging debate as to the culprits. Progress in this debate has been complicated by the fact that many of the theories that have been developed to account for the inequality upswing imply radically different patterns of distributional change, while predicting the same outcome in terms of the behavior of standard summary measures (e.g. a rise in the Gini coefficient or in Theil’s inequality). Handcock and Morris (1999) have developed methods that allow the analyst to precisely identify patterns of distributional change and a set of summary measures to characterize such changes. These are based on the relative distribution, defined for our purposes as the ratio of the fraction of households in the baseline year to the fraction of households in the comparison year in each decile of the distribution of income. We use the available high-quality data from the Luxemburg Income Study to explore the evolution of household income inequality in 16 core societies. We describe exactly how inequality grew in some core societies since the late 1960s and discuss the extent to which patterns of distributional change were homogeneous or heterogeneous across the core. We find that: 1) rising inequality is generally associated with polarization, rather than upgrading or downgrading alone; 2) among those societies experiencing the largest increases in inequality, upgrading typically takes precedence over downgrading in the course of such polarization; and 3) declining inequality, where it occurs, has been the result of convergence, with the magnitude of the shift from the lower tail to the middle exceeding that of the shift from upper tail to the middle.

Income Inequality, Global Economy and the State

We investigate interrelationship among income inequality, global economy and the role of the state using an unbalanced panel data set with 311 observations on 60 countries, dated from 1970 to 1994. The analysis proceeds in two stages. First, we test for effects on income inequality of variables characterizing the situation of a society in the world system: world system position (core, semi-periphery, periphery), foreign trade structure, export commodity concentration, export partner concentration and size of the state (measured as government expenditure or revenue). Second, we analyze the role of the interaction between foreign direct investment and government size in the inverted-U shaped relationship of income inequality with foreign investment. We find that most traditional measures of trade dependence have inconsistent or weak positive effects on inequality, while export commodity concentration has a negative effect. We also find that the effects of foreign direct investment on inequality is positive at low to intermediate levels of government size, but that this effect is substantially attenuated or negative in societies with a larger public sector. We conclude that distributional outcomes are dependent upon how the state reacts to growing globalization-related pressures.

Explaining the Upswing in Direct Investment: A Test of Mainstream and Heterodox Theories of Globalization

The internationalization of production has played an integral role in the process of globalization. Using data on direct investment outflow from 18 OECD nations and dynamic panel data methods, I explore various accounts of the recent upswing in direct investment outflow. I test a model that is informed by mainstream theories of international production and by heterodox theories of globalization. Consistent with mainstream theories, the results indicate that direct investment is affected by factors such as skill intensity and population. Support is also found for arguments that link direct investment to social democratic government, strike intensity, and union density. Contrary to the popular wisdom on globalization, the size of the social wage and de-commodification are found to be negatively related to direct investment outflow.

Trends in Income Inequality in the United States

Two powerful icons have dominated descriptions of historical trends in income inequality in the United States and other industrial societies: the Kuznets curve and the Great U-Turn.