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Impact of Informational and Cultural Globalization, R&D, and Urbanization on Inequality

Abstract:

One of the most serious problems facing modern society is income inequality. The richest 10% of the world’s population currently takes home 52% of income and 71% of the world’s population lives in countries where inequality has increased (World Economic Forum). In recent years, globalization and the technological progress have promoted the consolidation of globalization in most countries, generating a direct and indirect impact on people’s quality of life. Sustainable Development Goal 10 (SDG10) states that reducing inequalities should be a policy of governments’ priority to achieve sustainable development. This research examines the impact of informational and cultural globalization, research and development, and urban concentration on income inequality using the theoretical framework of Kuznets’ equity-income hypothesis (1955). In the methodological strategy, we use linear and non-linear methods: threshold regressions and second-generation cointegration techniques of panel data. The results show a threshold effect in real per capita output, informational and cultural globalization. The cointegration results demonstrate an equilibrium relationship between the five series at the different levels of development. The FMOLS model results show that informational and cultural globalization, R&D, and urbanization have a heterogeneous impact on income inequality. Policymakers can take advantage of the opening of markets to adopt new technologies and promote job creation in urban areas to achieve SDG 10.