Income inequality and structures of international trade

Firat Demir, Jiandong Ju and Yin Zhou

Asia-Pacific Journal of Accounting & Economics, 2012, vol. 19, issue 2, 167-180

Abstract: The effects of trade openness on within-country income inequality in developing countries are found to be inconclusive in existing literature. This study proposes a “threshold effect” to address this issue. We argue that when exports benefit a large portion of population, it is more likely to decrease income inequality within a country; otherwise, increasing exports will likely increase the income inequality. Using a data-set of 55 developing countries from 1981 to 2005, we find that if the employment share of manufacturing industry is above (below) a threshold, the increase in the share of manufactures exports reduces (increases) the within-country income inequality.

Date: 2012
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DOI: 10.1080/16081625.2012.667379

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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