In this paper we assess the empirical importance of changes in inequality on the demand for imports by examining panel data for 59 developing and developed countries for the 1970-1997 period. We find significant evidence supporting that inequality has a large influence on the demand for imports. Moreover we find that this influence is positive for high-income countries (countries that mainly produce and export high quality varieties of vertically differentiated products) and negative for low-income countries (countries that produce and export low-quality varieties of vertically differentiated products). These findings are explained by developing a model of trade in vertically differentiated products.