LINKAGES BETWEEN INTELLECTUAL PROPERTY RIGHTS REGIME AND INCOME INEQUALITY

This paper examines the impact of strengthening Intellectual Property Rights (IPRs) on within-country income inequality for a cross-section of 65 developed and developing countries for the time period 1995-2009.The results indicated that strengthening of IPRs led to an increase in income inequality in WTO-member developing countries after they started modifying their national IPR regimes to conform to the TRIPs requirements. IPRs tend to raise income inequality by generating a more skewed distribution of wages. Stronger IPRs increased the demand for skilled labor force as it raised the return on R&D activities. This caused a relative increase in skilled labor wages, creating a wage bias in favor of skilled labor against unskilled labor, thus aggravating income inequality within a developing country. Moreover, the effect on inequality was more pronounced for developing countries that were experiencing higher per capita GDP growth rates. As for the developed countries included in the sample, the analysis seemed to suggest th at IPRs led to a decline in income inequality over the study period.