Inequality under globalization: State of knowledge and implications for economics

Co-authored with LBJ School postdoctoral fellow Jaehee Choi, this paper considers the state of knowledge of economic inequalities, measured within countries over the past half-century, and presents a consistent, dense global data set which (a) permits the ranking of about 150 countries by their level of pay or income inequality, (b) permits the calculation of a global time trend for the evolution of inequalities from 1963 to 2014, and (c) demonstrates the close relationship between movements of exchange-rates and movement of pay and income inequality in a wide range of countries, excepting only the largest. The chief implication for economic science is that distribution should be considered part of a global macroeconomics driven largely by financial conditions, rather than as a microeconomic topic determined in labor and product markets.