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To analyse in-work poverty, we build a model in which human capital and productivity varies over time with experience, time-related obsolescence and poverty. The model reveals four possible trajectories: poverty to exclusion, permanent poverty, the emergence from poverty, and finally, from poverty to non-poor worker and then back to poverty. It also generates the main traits of in-work poverty in terms of skill, age, duration, and family characteristics. Both skill-biased technical change and globalization boost in-work poverty and exclusion. When unemployment compensation is introduced, being a poor worker can be a rational choice for individuals who accept lower pay today to earn more tomorrow.

This book provides an up-to-date survey of existing economic literature on the dimensions of growing income inequalities in both advanced and emerging countries. The different explanations and dimensions of inequalities are addressed, particularly globalization, technical progress, in-work poverty, changes in labour market institutions, education and intergenerational mobility, growth and development. The nine chapters provide simplified models exploring each of these elements, and assess commonly accepted explanations and mechanisms.

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Both developed and developing countries have experienced a huge globalization of their economies and an increase in within-country income inequality. We survey the literature on the globalization-inequality relationship. The extension of the North-South Heckscher-Ohlin-Samuelson (HOS) approach by relaxing certain simplifying assumptions makes it possible to generate most of the observed facts. Production segmentation and offshoring increase inequality in developed and developing countries. Firm heterogeneity generates intra-skill group inequality. Globalization causes changes in technologies and in institutions that can foster inequality. Most of these mechanisms combine globalization with technological or/and institutional changes, which reconcile the three major explanations for the rise in inequality.