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Average income, income inequality and export unit values

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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 relationship between a country's average income and the quality of its exports, but further identify a heterogeneous impact of income inequality: we find a greater income spread to be deneficial for an exporter's 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 inequaltity and of the quality index. We finally show that this heterogeneous impact of income inequality along the average income dimension is consistent with models emphasizing the role of the composition of local demand in detemining the comparative advantage of countries in terms of quality

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  • Hélène Latzer & Florian Mayneris, 2018. "Average income, income inequality and export unit values," Documents de travail du Centre d'Economie de la Sorbonne 18031, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:18031
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    Cited by:

    1. 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.
    2. 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).
    3. Weiwen Qian & Yinguo Dong & Yuchen Liu, 2023. "The impact of mutual recognition of geographical indications on the quality upgrading of China’s agricultural exports," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-15, December.

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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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