Globalization Boosted Income Inequality, Study Says

Globalization’s rise in recent decades has widened income inequality in the U.S. while padding executives’ pockets, according to a study put out by the National Bureau of Economic Research that directly links globalized commerce with the country’s prominent wage gap.

Researchers from the University of Colorado–Boulder and Williams College in Massachusetts surveyed executive compensation at thousands of U.S. companies between 1993 and 2013 and concluded that “recent globalization trends have increased U.S. inequality by disproportionately raising top incomes.”

“Globalization and income inequality are currently the two most important economic issues, with dissatisfaction about both of these forces shaping elections throughout the developed world,” the researchers said. “The source of globalization’s impact on top incomes matters because it influences society’s willingness to tolerate inequality.”

Extensive research efforts in recent years have looked at executive pay dynamics, income inequality and the effects of globalization, but seldom have the three topics been tackled simultaneously. On the CEO compensation front, the left-leaning Economic Policy Institute in 2015 found executive pay had grown by 997 percent between 1978 and 2014, while the average compensation for a private-sector production and nonsupervisory worker increased by just 10.9 percent.