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Average income, income inequality and export unit values

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  • Mayneris, Florian
  • Latzer, Helene

Abstract

This paper analyses the relationship between a country’s income distribution and its exports’ unit values. Using bilateral export flows, we not only confirm the positive association between a country’s average income and its export unit values, but further identify a heterogeneous relationship with income inequality: we find a greater income spread to be associated with higher exports unit values in the case of poor countries only. These results are robust to the inclusion of controls for other determinants of export unit values, as well as to the use of alternative measures of income inequality and of the quality index. We finally discuss various theoretical rationalisations for this heterogeneous relationship between income inequality and the quality content of exports along the average income dimension, and show suggestive evidence that demand-side mechanisms can account for it at least partly.

Suggested Citation

  • Mayneris, Florian & Latzer, Helene, 2021. "Average income, income inequality and export unit values," CEPR Discussion Papers 15887, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15887
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    Cited by:

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    2. Andrea Ciani, 2021. "Income inequality and the quality of imports," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(2), pages 375-416, May.
    3. Ponce, Pablo & Yunga, Fernando & Larrea-Silva, Jhohana & Aguirre, Nikolay, 2023. "Spatial determinants of income inequality at the global level: The role of natural resources," Resources Policy, Elsevier, vol. 84(C).

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    More about this item

    Keywords

    Income distribution; Export unit values; Product quality; Trade; Home market effect;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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