INCOME INEQUALITY AND OPENNESS : CROSS COUNTRY STUDY

Abstract

The objective of this thesis is to determine whether there is any relationship between income inequality and openness of an economy. While there were limited theoretical and empirical studies done in this area, by observing the relationship among other variables, we postulated that there could possibly be a negative relationship between income inequality and openness. The data sets were classified into three categories: world, OECD and less developed countries (LDCs). The simple multiple linear regressions indicate that in the world and among the LDCs, there are no significant relationship between income distribution and openness. However, among the OECD countries, there is a significant negative relationship between the two variables. Our robust findings also indicate that income inequality and growth are negatively related among the LDCs. At the same time, we found them to be positively related among the OECD countries.