Abstract
In this paper, we investigate the relationship between globalization and income inequality over time. We employ three globalization indices, including GlobalIndex, KOF-Index, and a composite globalization index generated from factor analysis to implement the empirical tests in the use of the panel threshold regression model. Our empirical results show the tests for single threshold model in the cases of taking GlobalIndex and KOF-Index as the threshold variable are both highly significant. It implies the effect of globalization on income inequality differs depending on the degree of globalization in a country. In the initial stage of globalization, globalization raises the income inequality in a country. When the degree of globalization is over a critical value, the rate of rising income inequality may have the tendency to slow down.