 Income inequality and trade of ‘Made in China’Sisong Duan, Yifan Li and Zhuang Miao The Journal of International Trade & Economic Development, 2022, vol. 31, issue 4, 614-645 Abstract: This paper presents a theory and empirical evidence on how destination countries’ income inequality affects the export price and volume of Chinese products. We provide a simple model to illustrate exporters’ market dynamics and product-quality specialization induced by the change in the destination country's income distribution. Under the nonhomothetic preference assumption, the model predicts that higher income inequality makes Chinese exporters who produce low-quality products concentrate on serving low-income consumers, which accounts for a large proportion of the population. Exploiting highly disaggregated customs transaction records of Chinese exporters, we provide empirical evidence consistent with the model predictions: (i) A rise in income inequality leads to a lower export price, (ii) induces entry of new exporters, and (iii) leads to higher export value and export price dispersion. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:31:y:2022:i:4:p:614-645 Ordering information: This journal article can be ordered from DOI: 10.1080/09638199.2021.1999484 Access Statistics for this article The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals |
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