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Product quality, the scope of export destinations and skill demand for sustainable development: An investigation for China

Author

Listed:
  • Yu, Zhuangxiong
  • Yang, Yang
  • Dong, Jiemiao
  • Mukhopadhaya, Pundarik

Abstract

This paper incorporates firms' export-destination breadth into the skill-selection framework and shows that product quality shapes skill demand through a nonlinear demand-side mechanism, extending quality-valuation models that assume linearity. The theoretical model predicts an inverted U-shaped relationship between export-destination scope and product-quality upgrading, indicating a substitution between export scope and relative skill demand when product quality is below a critical threshold. Using firm-level data from Guangdong Province (2013–2015), we develop a segmented mediating-effect model that confirms both the classic task-specialization channel and the nonlinear influence of export-scope breadth on skill upgrading. Once product quality exceeds the identified threshold, higher export quality raises skilled-labor demand by narrowing firms' export-market ranges. We further show that vertical differentiation and trade costs are key channels driving export-scope adjustments. The study provides a comprehensive perspective on product-quality upgrading and the evolution of firms’ skill structures in developing economies.

Suggested Citation

  • Yu, Zhuangxiong & Yang, Yang & Dong, Jiemiao & Mukhopadhaya, Pundarik, 2026. "Product quality, the scope of export destinations and skill demand for sustainable development: An investigation for China," Journal of Development Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:deveco:v:182:y:2026:i:c:s0304387826000775
    DOI: 10.1016/j.jdeveco.2026.103794
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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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