International Trade, Factor Endowments, and Income Inequality: Evidence from Chinese Regional Data

摘要

This study estimates the effects of international trade on income distribution within Chinese provinces. Dynamic panel data from a household survey and provincial statistics from 1988 to 2009 were used. Bias-corrected least square dummy variable estimations were employed. The results show that the distribution effects of exports and imports offset each other. Exports tend to reduce income inequality, but its effect varies depending on the distribution of factor endowments across regions. Imports tend to increase income inequality, mainly due to the positive relationship between imports and inequality in skill-intensive regions.