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Globalization, decentralization and income inequality: The case of China

Listed author(s):
  • Mah, Jai S.

The current study examines the effect of trade liberalization and expansion of foreign direct investment inflows, together with the pursuit of decentralization, on China's income inequality between 1985 and 2007. As the degrees of integration of the concerned variables are revealed to be different,Stock and Watson (1993) dynamic ordinary least squares method is employed to reveal the cointegrating relationship. The empirical evidence shows that trade liberalization has led to the higher income inequality, discrediting the Stolper–Samuelson theorem in international trade. There is mixed evidence relating to the effect of FDI inflows on income inequality. Decentralization is shown not to influence it.

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File URL: http://www.sciencedirect.com/science/article/pii/S0264999313000114
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 31 (2013)
Issue (Month): C ()
Pages: 653-658

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Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:653-658
DOI: 10.1016/j.econmod.2012.09.054
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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  16. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
  17. Alyson C. Ma, 2006. "Geographical Location of Foreign Direct Investment and Wage Inequality in China," The World Economy, Wiley Blackwell, vol. 29(8), pages 1031-1055, 08.
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