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Measured skill premia and input trade liberalization: Evidence from Chinese firms

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  • Chen, Bo
  • Yu, Miaojie
  • Yu, Zhihao

Abstract

Using Chinese firm-level production data, this paper developed a Mincer (1974)-type approach to investigate the impact of input trade liberalization on firms' wage inequality between skilled and unskilled workers (or skill premium). When controlling for product-market tariffs in a firm's industry, we find robust evidence that reduced input tariffs in a firm's industry are associated with a higher skill premium at firms with more skilled workforces. This effect is more pronounced at ordinary (non-processing) firms. We also provide evidence that reduced input tariffs in a firm's industry are associated with higher value added and profits at firms with more skilled workforces.

Suggested Citation

  • Chen, Bo & Yu, Miaojie & Yu, Zhihao, 2017. "Measured skill premia and input trade liberalization: Evidence from Chinese firms," Journal of International Economics, Elsevier, vol. 109(C), pages 31-42.
    • Handle: RePEc:eee:inecon:v:109:y:2017:i:c:p:31-42
    DOI: 10.1016/j.jinteco.2017.08.005
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    More about this item

    Keywords

    Skill premium; Input trade liberalization; Firm evidence;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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