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China wage inequality: the role of trade and technology

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  • Yun Xu
  • Ouyang

Abstract

This article empirically investigates the impact of international trade and technical change on skill premia for a panel of 28 manufacturing sectors in China over the period 2002-2011. The results find that the effect of changes of the share of SOEs is twofold. First, the contraction of SOEs promoted productivity growth, and the promoting effect was skill-biased, which tended to increase the skill premia in China. Second, the drop of product prices resulting from falling SOEs share was more magnificent in skill-intensive industries, which helped to mitigate wage inequality through product prices. The accounted-for portion of price changes by productivity growth was skill-biased, significantly raising skill premia through product prices. However, the portion of price changes accounted for by foreign price was unskill-biased, and world price competition diminished the growing income disparity in China.

Suggested Citation

  • Yun Xu & Ouyang, 2015. "China wage inequality: the role of trade and technology," Applied Economics, Taylor & Francis Journals, vol. 47(47), pages 5057-5071, October.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:47:p:5057-5071
    DOI: 10.1080/00036846.2015.1042142
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    1. Robert C. Feenstra & Gene M. Grossman & Douglas A. Irwin (ed.), 1996. "The Political Economy of Trade Policy: Papers in Honor of Jagdish Bhagwati," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061864, December.
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    Cited by:

    1. Thanos Fragkandreas, 2022. "Three Decades of Research on Innovation and Inequality: Causal Scenarios, Explanatory Factors, and Suggestions," Working Papers 60, Birkbeck Centre for Innovation Management Research, revised Feb 2022.
    2. Leurent, Martin & Da Costa, Pascal & Jasserand, Frédéric & Rämä, Miika & Persson, Urban, 2018. "Cost and climate savings through nuclear district heating in a French urban area," Energy Policy, Elsevier, vol. 115(C), pages 616-630.
    3. Xu, Yun & Ouyang, Alice Y., 2017. "Tariffs, relative prices and wage inequality: Evidence from China," China Economic Review, Elsevier, vol. 46(C), pages 97-109.

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