Income inequality, international trade and firm location

Nazanin Behzadan and Richard Chisik

Economics Letters, 2022, vol. 214, issue C

Abstract: In this paper we analyze the effect of within-country income inequality on economic outcomes. We develop a new model of international trade with non-homothetic preferences whereby within-country income distribution affects firm location decisions. In a two-country, three-sector framework with increasing returns to scale and positive trade costs we show that increases in income inequality generates firm movement to countries with more equal income distributions.

Keywords: International trade; Inequality; Economic geography (search for similar items in EconPapers)
JEL-codes: D31 F12 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Working Paper: Income Inequality, International Trade and Firm Location (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:214:y:2022:i:c:s0165176522000945

DOI: 10.1016/j.econlet.2022.110442

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