Tuesday, February 19, 2019
The China shock and its impact on income inequality in Vietnam
From a new VOX post:
“The sudden rise in trade between China and the US – known as the ‘China shock’ – has been the subject of numerous studies, but the even more dramatic increase in trade between China and developing countries in Asia has been somewhat overlooked. This column studies the impact of the China shock on income inequality in Vietnam. It suggests that increased trade with China reduced income inequality. It resulted in income growth for the lowest income quantiles while higher income groups saw their income decline.”
“Our estimation results show that import competition from China has helped reduce income inequality in Vietnam. When looking separately at imports of intermediate goods and final goods, we find that both have helped reduce income inequality in Vietnam.As an additional step, we apply a quantile regression approach to have a fuller picture on the effects of import competition from China on different household income groups. The results show that at the beginning of our time period, all income quantiles seemed to have suffered from increased imports from China. The negative effect increased with income, suggesting a degressive income effect. However, during the periods 2006 and 2010, no income group suffered a significant effect, except the highest income groups. The income effect completely changed in the two last periods (2012 and 2014). The two lowest income quantiles enjoyed a positive effect on their income, with the poorest group benefitting most. Figure 2 shows the results of the quantile regression for the year 2014.”
Posted by at 10:39 AM
Labels: Inclusive Growth
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