Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156224
Authors: 
Ciani, Andrea
Year of Publication: 
2017
Series/Report no.: 
DICE Discussion Paper 245
Abstract: 
This paper investigates how income inequality affects the quality of imported products. In a heterogeneous-firms trade model, I show that higher inequality increases total expenditure leading to a reduction in unit value and quality of imported goods. To test this prediction, I employ detailed firm-level trade data for the period 2001- 2006. I empirically document that higher inequality is associated with lower unit value and lower quality of imported products. This negative relation is due to firm-level heterogeneous responses to variations in total expenditure. Incumbent firms react to an increase in total expenditure caused by higher inequality lowering unit values, while firms entering the same market for the first time supply goods of lower quality.
Subjects: 
Income Inequality
Unit Value
Quality
Trade
JEL: 
F14
L11
L15
O15
ISBN: 
978-3-86304-244-8
Document Type: 
Working Paper

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