Income inequality of destination countries and trade patterns: Evidence from Chinese firm-level data
Zhuang Miao (),
Yifan Li and
MPRA Paper from University Library of Munich, Germany
In this paper, we investigate the relation between the export patterns and the income inequality of the destination countries using the Chinese firm-level data. Our empirical analysis finds two main results: (i) export price decreases in the income inequality of the destination countries; while (ii) the exporting firm number and export value will increase in the inequality level. With a conventionally theoretical framework, we discuss the potential influencing mechanism. A higher income inequality leads to higher share of poor consumers in a country, which will lower the quality threshold for Chinese exporters. In this case, the firms with less competitive and producing low quality products are able to enter this market. As a result, we observe that in response to a higher income inequality, more firms enter the market while the exporting price decreases in this market.
Keywords: Income Inequality; Trade Patterns; Chinese Firm-level Data (search for similar items in EconPapers)
JEL-codes: F12 F14 L11 (search for similar items in EconPapers)
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