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Using the newly developed KOF-index of globalization, as well as the economic freedom index from the Fraser institute, the authors examine if globalization and economic liberalizations are linked to increases in income inequality within countries. Studying changes between 1980 and 2000, they find a positive link between inequality and liberalization only for certain types of reforms: Trade liberalizations, deregulation of product and labor markets and economic globalization. The Scandinavian welfare states have increased economic freedom and globalization more than other countries, but they have also experienced high increases in income inequality.
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