Income inequality and export prices across countries

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URL:	https://ub-madoc.bib.uni-mannheim.de/38242
URN:	urn:nbn:de:bsz:180-madoc-382423
Document Type:	Working paper
Year of publication:	2013
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Finanzwissenschaft u. Wirtschaftspolitik (Janeba 2004-)
Subject:	330 Economics
Classification:	JEL: F12 , F14 , L11,
Keywords (English):	exports prices , income distribution , product quality , markups
Abstract:	This paper provides first firm-level evidence of the links between income inequality and the patterns of trade and export prices. We identify a theoretical mechanism behind these links, which suggests that a more unequal income distribution leads to higher average prices. We test the theory using detailed data for Brazilian exporters and find that the destination countries’ first and second moment of the income distribution are important determinants of export prices. Controlling for income per capita, prices are systematically higher in more unequal countries, with this effect being particularly relevant for middle- income countries and holding only for differentiated goods.