Technology Progress, Trade Openness, and Income Inequality: A Cross-Country Empirical Study

Yih-Luan Chyi () and Yi-Hsuan Su ()
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Yih-Luan Chyi: National Tsing Hua University
Yi-Hsuan Su: Science & Technology Policy Research and Information Center

Chapter Chapter 32 in Advances in Cross-Section Data Methods in Applied Economic Research, 2020, pp 491-506 from Springer

Abstract: Abstract Since the 1990s, many countries encountering trade liberalization and rapid technological progress have experienced rising within-country income inequality. This paper investigates relationships between trade openness and income inequality in both cross-country and country-specific framework. Using a panel of 61 countries over a period from 1975 to 2005, this study estimates a threshold regression model to identify an inverted-U relationship between openness and inequality with threshold effects of technological progress. On the one hand, income inequality among individuals in countries with less advanced technologies might be getting worse when their trade becomes more opened. On the other hand, for countries with a higher degree of technology advancement, trade openness tends to improve their income inequality.

Keywords: Trade openness; Technological progress; Income inequality; F14; F62; O30 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-38253-7_32

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DOI: 10.1007/978-3-030-38253-7_32

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