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Globalization, decentralization and income inequality: The case of China

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  • Mah, Jai S.

Abstract

The current study examines the effect of trade liberalization and expansion of foreign direct investment inflows, together with the pursuit of decentralization, on China's income inequality between 1985 and 2007. As the degrees of integration of the concerned variables are revealed to be different,Stock and Watson (1993) dynamic ordinary least squares method is employed to reveal the cointegrating relationship. The empirical evidence shows that trade liberalization has led to the higher income inequality, discrediting the Stolper–Samuelson theorem in international trade. There is mixed evidence relating to the effect of FDI inflows on income inequality. Decentralization is shown not to influence it.

Suggested Citation

  • Mah, Jai S., 2013. "Globalization, decentralization and income inequality: The case of China," Economic Modelling, Elsevier, vol. 31(C), pages 653-658.
    • Handle: RePEc:eee:ecmode:v:31:y:2013:i:c:p:653-658
    DOI: 10.1016/j.econmod.2012.09.054
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    Cited by:

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    7. Xiang Li & Dan Su, 2021. "Does Capital Account Liberalization Affect Income Inequality?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(2), pages 377-410, April.
    8. Hebatalla Rezk & Goma Amer & Nahla Fathi & Sizhong Sun, 2022. "The impact of FDI on income inequality in Egypt," Economic Change and Restructuring, Springer, vol. 55(3), pages 2011-2030, August.
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    10. Chien-Chiang Lee & Chi-Chuan Lee & Chun-Ping Chang, 2015. "Globalization, Economic Growth and Institutional Development in China," Global Economic Review, Taylor & Francis Journals, vol. 44(1), pages 31-63, March.
    11. Le, Thai-Ha & Nguyen, Canh Phuc & Su, Thanh Dinh & Tran-Nam, Binh, 2020. "The Kuznets curve for export diversification and income inequality: Evidence from a global sample," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 21-39.
    12. Jin, Haizhen, 2023. "Effects of decentralization on firm performance: Evidence from Chinese county-level quasi-experiments," Economic Modelling, Elsevier, vol. 119(C).
    13. Stefan Jestl & Sandra M. Leitner & Sebastian Leitner, 2022. "The relative impact of different forces of globalization on wage inequality: A fresh look at the EU experience," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1003-1037, September.
    14. Prathi Seneviratne, 2017. "Explaining Changes in Sri Lanka’s Wage Distribution, 1992-2014: A Quantile Regression Analysis," Working Papers 2017-01, Carleton College, Department of Economics.
    15. Mehmet Akif DESTEK, 2018. "Dimensions of globalization and income inequality in transition economies: taking into account cross-sectional dependence," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 5-25, December.
    16. Ahmed, Wasim & Hussain, Safdar & Jafar, Rana Muhammad Sohail & Guang-Ju, Wang & Rabnawaz, Ambar & Saqib, Zulkaif Ahmed & JianZhou, Yang, 2016. "Impacts of Trade Liberalization on Dairy Industry in China," MPRA Paper 70385, University Library of Munich, Germany.
    17. Xiaohua Chen & Xinyi Zhang & Yuhua Song & Xueping Liang & Liangjun Wang & Yina Geng, 2020. "Fiscal Decentralization, Urban-Rural Income Gap, and Tourism," Sustainability, MDPI, vol. 12(24), pages 1-14, December.
    18. Song, Tao & Cieslik, Andrzej, 2020. "The effects of free trade agreements on regional wages in China," Economic Systems, Elsevier, vol. 44(3).
    19. Law, Siong Hook & Naseem, N.A.M. & Lau, Wei Theng & Trinugroho, Irwan, 2020. "Can innovation improve income inequality? Evidence from panel data," Economic Systems, Elsevier, vol. 44(4).
    20. Huang, Kaixing & Yan, Wenshou & Sim, Nicholas & Guo, Yuqing & Xie, Fang, 2022. "Can trade explain the rising trends in income inequality? Insights from 40 years of empirical studies," Economic Modelling, Elsevier, vol. 107(C).

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    More about this item

    Keywords

    Globalization; Decentralization; Income inequality; China;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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