Globalization and income inequality: A comparative study of panel data approach for the EU countries

The causal relationship between globalization and income inequality is a significant issue of academic and social interest. This study investigates the correlation between income inequality and globalization with globalization measured with financial and trade variables. We apply an econometric model by adopting panel data for the EU-24 and EU-26 countries over the period 2000–2018. In the meantime, the EU countries are divided into subgroups in terms of Core, Periphery, High Technology and the New EU Members for detailed analysis. As our results suggest, trade openness, capital account, R&D reduced inequality while capital account openness and ICT exports acted as driving forces of inequality over 2000–2009. From 2010 to 2018, R&D, trade openness and FDI exerted significant influences on the reduction of the level of inequality.