The Influence Of Income Distribution On Product Quality From The Perspective Of International Trade

This thesis discusses the influence of income inequality degree on product quality selection under different income levels.It intends to propose an explanation of the product quality decline in the rapidly developing Chinese market in recent years based on the perspective of income distribution.On the premise of the established income level,this thesis first analyzes the impact of income distribution inequality on product quality composition by building the heterogeneous consumer and heterogeneous enterprise model as well as introducing the Non-homothetic Preference Theory.In addition,the endogeneous income model further indicates that the impact of income distribution on product quality leads to opposite results owing to various national development levels.Only in countries with higher development or higher per capita income,can product quality be increased by improving income distribution;while on the immature development stage,improving the income distribution will inhibit product quality.Theoretically,a model of heterogeneous labor and endogeneous income are extended.As labor productivity and labor allocation being the decisive factors of income disparity of workers,the influence of which towards the portion of low quality products is further discussed.There are two propositions:first,heterogeneous labor takes the same proportion in the production of two products;the second,providing a non-homothetic preference for high quality products,a specific income distribution exists to maximum the proportion of low-quality products.In this article,we empirically investigate the impact of income inequality on the product quality from the perspective of cross-country and cross-province.The empirical results on the whole,show that lower Gini Coefficient results in higher product quality by analyzing panel data of 218 countries from 1984 to 2011.However,different conclusions can be drawn if the state is classfied according to different development levels or continents.The decrease of income inequality will improve product quality in high income countries,which is contrary to the low income countries.However,the relationship between import product quality and Gini Coefficient is not significant in upper middle income countries.Based on the panel threshold model,it is further found that there exists a remarkable nonlinear threshold effect between the import product quality and Gini Coefficient.With the increase of income level,at the beginning,income distribution improvement(lower Gini Coefficient)has a negative impact on product quality then a positive impact,a non-linear relationship,which verifies the result of the theoretical model.From the provincial perspective,the quality macro index of the imported products in 31 provinces are measured,and the sample data of the provincial Gini Coefficient are expanded for further analysis of the cross-sectional data.The results show that,generally,income distribution improvement(lower Gini Coefficient)has a prohibitive impact on product quality.However,the prohibitive effect between the two factors is decreasing from the western region to the eastern one.Through the panel threshold regression analysis from the provincial perspective,it is further proves that with the increase of per capita income,the prohibitive influence of lower Gini Coefficient on product quality is decreasing.Products are divided into three typical categories:necessities,luxury goods and industrial products,and the impact of income inequality on them is further discussed respectively.The results indicate that at the present stage,income distribution improvement will improve the quality of necessities,reduce the quality of luxury goods,and has no significant impact on industrial products.The product structure and the trade mode in China have special properties.We can not take all products into account to measure the overall quality level.Some foreign scholars have observed the phenomenon that produce quality has been declining instead of increasing,which is only an appearance.The quality improvement of necessities consumed by most income groups reflects the influence of income distribution.Although the quality of luxury goods and industrial products will be disturbed by other factors such as population aging,consumption habit lagging and so on,essentially,income distribution improvement can also increase product quality in China.It is considered that despite the rapid economic development in recent years,China has a large area and a huge population,which leads to unbalanced and immature development.The income gap between urban and rural areas as well as between different regions is still large.There still exists a large number of low income groups,and the overall preference for product quality is relatively low.Income distribution reform should focus on the accurate poverty alleviation policy.An "olive"income distribution structure is to be constructed to improve the national quality preference level.Demand structure upgrading and supply-side reform are supposed to form a synergistic effect to jointly promote the transformation and upgrading of China's industrial structure.