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Abstract
We analyze globalization impacts on changes in income inequality, focusing on the top and bottom of the income distribution. Data are for all US metro areas from 1980 to 1990. Income polarization has risen. The international flow of labor polarizes earnings by depressing wages among low-income workers. Producer services increase earnings at the upper levels, but, in contrast to the main theories, are unrelated to polarization.
Notes
1. Following Sassen (Citation1994), industries coded as producer services are those which provide services for firms where the production and organization of highly complicated transactions promoted by the global economy take places. By SIC 3 digit code, they are (1) security, commodity brokerage, and investment companies; (2) Real estate, including real estate insurance offices; (3) advertising; (4) computer and data processing services; (5) business services, n.e.c.; (6) legal services; (7) accounting, auditing, and bookkeeping services; (8) research, development, and testing services; and (9) management and public relations services.
2. We explored the robustness of the results in several ways. Skewness and kurtosis were low, and intercorrelations among explanatory variables were below 0.3. Residual plots were examined and are available upon request.