Explaining Import Variety and Quality: The Role of the Income Distribution

55 Pages Posted: 25 Sep 2006 Last revised: 29 Mar 2021

See all articles by Yo Chul Choi

Yo Chul Choi

Bank of Korea - Research Department

David L. Hummels

Purdue University - Department of Economics; National Bureau of Economic Research (NBER)

Chong Xiang

Purdue University - Krannert School of Management

Date Written: September 2006

Abstract

We examine a generalized version of Flam and Helpmanâ€TMs (1987) model of vertical differentiation that maps cross-country differences in income distributions to variations in import variety and price distributions. The theoretical predictions are examined and confirmed using micro data on income from the Luxemburg Income Study for 30 countries over 20 years. The pairs of importers whose income distributions look more similar have more export partners in common and more similar import price distributions. Similarly, the importers whose income distributions look more like the world buy from more exporters and have import price distributions that look more like the world.

Suggested Citation

Choi, Yo Chul and Hummels, David L. and Xiang, Chong, Explaining Import Variety and Quality: The Role of the Income Distribution (September 2006). NBER Working Paper No. w12531, Available at SSRN: https://ssrn.com/abstract=931376

Yo Chul Choi

Bank of Korea - Research Department ( email )

39, Namdaemun-ro, Jung-gu
Seoul, 04531
Korea, Republic of (South Korea)

David L. Hummels (Contact Author)

Purdue University - Department of Economics ( email )

West Lafayette, IN 47907-1310
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chong Xiang

Purdue University - Krannert School of Management ( email )

1310 Krannert Building
West Lafayette, IN 47907-1310
United States

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