This paper examines the relationship between trade and financial globalization and the rise in income inequality observed in most countries over the past two decades. Using a newly compiled panel of 51 countries over a 23-year period from 1981 to 2003, the paper reports estimates that support a greater impact of technological progress than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization—and foreign direct investment in particular—is associated with an increase in inequality. The paper finds that increasing trade and financial globalization have had separately identifiable and opposite effects on income distribution. Trade liberalization and export growth are found to be associated with lower income inequality, while increased financial openness is associated with higher inequality. However, their combined contribution to rising inequality has been much lower than that of technological change, both at a global level and especially markedly in developing countries. The spread of technology is, of course, itself related to increased globalization, but technological progress is nevertheless seen to have a separately identifiable effect on inequality. The disequalizing impact of financial openness—mainly felt through FDI—and technological progress both appear to be working by increasing the premium on higher skills and possibly higher returns to capital, rather than limiting opportunities for economic advancement. Consistent with this, increased access to education is associated with more equal income distributions on average. The paper contributes to the globalization-inequality literature by examining the effects of trade, financial globalization, and technology on income inequality in a comprehensive framework using a large panel of countries. The main findings are that income inequality has risen in most countries and regions over the past two decades, although average real incomes of the poorest segments of the population have increased across all regions and income groups. This suggests that inequality has increased in the upper parts of the distribution in most countries, a fact consistent with recent evidence in the United States and the United Kingdom. The analysis finds that increasing trade and financial globalization have had separately identifiable and opposite effects on income distribution. Trade liberalization and export growth are found to be associated with lower income inequality, while increased financial openness is associated with higher inequality. However, their combined contribution to rising inequality has been much lower than that of technological change, both at a global level and especially markedly in developing countries.This paper examines the relationship between trade and financial globalization and the rise in income inequality observed in most countries over the past two decades. Using a newly compiled panel of 51 countries over a 23-year period from 1981 to 2003, the paper reports estimates that support a greater impact of technological progress than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization—and foreign direct investment in particular—is associated with an increase in inequality. The paper finds that increasing trade and financial globalization have had separately identifiable and opposite effects on income distribution. Trade liberalization and export growth are found to be associated with lower income inequality, while increased financial openness is associated with higher inequality. However, their combined contribution to rising inequality has been much lower than that of technological change, both at a global level and especially markedly in developing countries. The spread of technology is, of course, itself related to increased globalization, but technological progress is nevertheless seen to have a separately identifiable effect on inequality. The disequalizing impact of financial openness—mainly felt through FDI—and technological progress both appear to be working by increasing the premium on higher skills and possibly higher returns to capital, rather than limiting opportunities for economic advancement. Consistent with this, increased access to education is associated with more equal income distributions on average. The paper contributes to the globalization-inequality literature by examining the effects of trade, financial globalization, and technology on income inequality in a comprehensive framework using a large panel of countries. The main findings are that income inequality has risen in most countries and regions over the past two decades, although average real incomes of the poorest segments of the population have increased across all regions and income groups. This suggests that inequality has increased in the upper parts of the distribution in most countries, a fact consistent with recent evidence in the United States and the United Kingdom. The analysis finds that increasing trade and financial globalization have had separately identifiable and opposite effects on income distribution. Trade liberalization and export growth are found to be associated with lower income inequality, while increased financial openness is associated with higher inequality. However, their combined contribution to rising inequality has been much lower than that of technological change, both at a global level and especially markedly in developing countries.