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The Effect and Mechanism of Trade Liberalization on Wage

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  • Xiaofang Zhang
  • Fei Yang

Abstract

This research discussed the relationship and mechanism between trade liberalization and the wage level of enterprises. Using the firm-level data from Annual Survey of Industrial Firms(ASIF) database and tariff data from World Bank, we find that, the final goods trade liberalization will reduce the wage, while the intermediate goods trade liberalization will improve the level of enterprises' wages. And that trade liberalization affects wages through firm performance. The reduction of input tariff reduces firm’s input cost, and increases firm’s sales and profit, then the firm has more ability to provide higher wages. While the decline of output tariff damages firm’s performance, which leads enterprises to transfer the loss by reducing wages.

Suggested Citation

  • Xiaofang Zhang & Fei Yang, 2021. "The Effect and Mechanism of Trade Liberalization on Wage," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(5), pages 184-184, July.
    • Handle: RePEc:ibn:ijbmjn:v:15:y:2021:i:5:p:184
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    References listed on IDEAS

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    4. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    5. Ana L. Revenga, 1992. "Exporting Jobs?The Impact of Import Competition on Employment and Wages in U. S. Manufacturing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 255-284.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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