William Easterly has discussed the effect of globalisation on inequality. Looking at the reasons for income inequality he has used the concepts of factor world and productivity world. In the factor world model differences of capital per worker cause differences, in the productivity world model it is productivity than causes income inequality.
Productivity world describes that relative productivity among factors of production is the same in the sectors across countries, but rich countries have absolute productivity advantage. The opposite concept being factor world, this claims factors of production movement based on free movement of those factors which in theory would reduce inequality between nations.
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