For example, if a country can now import cheaper steel from elsewhere, then there will be a contraction in domestic supply and a fall in employment and real incomes in that industry.
This can lead to higher rates of structural unemployment and a decline in real living standards.
The second essay examines whether the relationship between life satisfaction and income inequality or government welfare effort differs by country income group, that is, low-income, lower middle-income, upper middle-income, and high-income countries.
It further provides insight into the role of governance in mediating the relationship between inequality and life satisfaction.
These patterns are also observed for families considered to be vulnerable based on region of residence and the gender of the household head.
A noteworthy finding is that income assistance from private sources is also associated negatively with life satisfaction while income from property ownership and assets is associated positively with life satisfaction.The essay concludes that the relationship between inequality and life satisfaction is similar (significant and negative) across all country income groups when inequality is perceived as or signals inherent unfairness.Similarly, the association between government welfare effort and life satisfaction is similar (significant and positive) across all country income groups when the government is perceived to be doing enough for the poor.Real wages come under downward pressure and inequality can increase.We see this in regions of the UK for example where de-industrialisation has taken place leading to much higher rates of long-term unemployment and a worsening of economic and social deprivation.A rise in trade-to-GDP ratios signifies an increase in the volume and value of trade between countries and regions.Although trade based on comparative advantage has the potential to stimulate economic growth and lift per capita incomes, it can also lead to a rise in relative poverty.One of the hot political and economic issues of the age has been the ability of businesses operating in more than one country (a transitional company) to use shadow pricing and other forms of legal tax avoidance to reduce their liability to pay tax and thereby increase the return to those with an equity stake.Because of tax avoidance, national governments do not generate the revenues needed to pay for public services and welfare systems - both of which can have a progressive effect on the final distribution of income.If trade generates faster GDP growth, then the government will see an increase in tax revenues which might then be used to fund capital investment in public goods and merit goods and services including finance for re-training programmes and improvements to infrastructure in economically-depressed areas.Much depends on whether a government has sufficient resources and political will to implement an active regional and industrial policy to improve employment prospects for those negatively affected by globalisation.