International trade, geographic heterogeneity and interregional inequality

Research output: Contribution to journalResearch articleContributedpeer-review

Contributors

Abstract

We study the effect of international trade on interregional income inequality from 1992 to 2012 in the majority of countries worldwide using satellite night-light-based inequality proxies. For our analysis, we develop novel indicators for within-country heterogeneity in trade costs that are based on exogenous geographical features. In order to deal with potential endogeneity issues, we apply a gravity-style instrument that utilizes the occurrence of large natural disasters striking trade partners, as well as a Bartik-style instrument. In contrast to previous studies, our IV estimates reveal that international trade aggravates economic disparities only in those countries that have a higher within-country heterogeneity in terms of their access to the world market and their within-country trade costs.

Details

Original languageEnglish
Article number103427
JournalEuropean Economic Review
Volume127
Issue numberC
Publication statusPublished - 2020
Peer-reviewedYes

External IDs

Scopus 85085476604
ORCID /0000-0002-9937-8753/work/166763924

Keywords

Sustainable Development Goals

ASJC Scopus subject areas

Keywords

  • interregional inequality, Spatial inequality trade, Trade costs, Heterogeneous geography, Gravity model, Panel data, Interregional inequality, Spatial inequality trade, Trade costs, Heterogeneous geography, Gravity model, Panel data