Trade liberalization and regional labor market dynamics: Evidence from China’s WTO accession

Shen Zhou, Bing He, He-yong-le Ni and Shuqing Pang

Journal of International Money and Finance, 2022, vol. 125, issue C

Abstract: We analyze the evolution of the effects of China’s WTO accession on Chinese local labor markets. This is conducted by exploiting the variation in the tariff reductions across industries and the initial differences in the industry specialization of prefecture-level cities. The results reveal that cities facing larger tariff reductions experienced prolonged slower growth in average wages relative to other cities. However, the magnitude of this adverse effects over time form a hump-shape. Cities facing larger tariff reductions experienced growth in informal employment, but only for the short term. For the long term, there was growth in formal employment, which comes from the secondary sector. Higher administrative level cities recovered from the negative impact of trade liberalization on wages earlier than ordinary cities. Our estimation results are robust to various alternative measures, specifications and city samples.

Keywords: Trade Liberalization; Informal Labor Markets; Formal Labor Markets (search for similar items in EconPapers)
JEL-codes: F14 F16 J31 J46 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:125:y:2022:i:c:s0261560622000389

DOI: 10.1016/j.jimonfin.2022.102635

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