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China’s WTO accession and income inequality in European regions: External pressure and internal adjustments

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  • Kvedaras, Virmantas
  • Cseres-Gergely, Zsombor

Abstract

Exports from China have surged substantially since its accession to the World Trade Organization in 2001. We investigate how this expansion affected income inequality within European regions by separating the trade pressure experienced in external and domestic markets, as well as exploring the importance of several economic mechanisms. Despite some intermediate adjustments, softening the influence of Chinese pressure and even facilitating European exports, we establish a significant increase of inequality that is concentrated mostly in the lower part of regional income distributions. We determine a significant channeling of the trade pressure to income inequality through the shrinking manufacturing sector, the increasing unemployment rate, and the technological upgrade of manufacturing exports, together with an increasing demand for better-qualified labor.

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  • Kvedaras, Virmantas & Cseres-Gergely, Zsombor, 2021. "China’s WTO accession and income inequality in European regions: External pressure and internal adjustments," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 34-53.
    • Handle: RePEc:eee:ecanpo:v:69:y:2021:i:c:p:34-53
    DOI: 10.1016/j.eap.2020.11.006
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    More about this item

    Keywords

    China; EU; Globalization; Income; Inequality; Regions; Trade;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts

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