The incidence of inflation and globalization to income inequality: Does capital intensity matter?

Intense firms’ competition for attracting finance and increasing the market share of production sale, telecommunication and information technology progress in fast transition of money and subscribing the technical and financial information are some important aspects that make the ignorance of open economy profits. In this study, the effect of inflation and financial and trade globalization on income inequality have been examined based on the Stolper–Samuelson, Kuznets and Mandel theories, in countries with high capital intensive and low capital intensive. To do so, data from 2000-2014 and GMM method have been used. The results showed that in both groups of countries, inflation and an increase in financial and trade globalization cause an increase and decrease in income inequality respectively. It also showed that despite this fact that difference in capital intensity does not cause a significant difference in amount and direction of commercial globalization effect on income inequality, but in countries with higher capital intensity, financial globalization has the higher effect on reduction of income inequality