Economics at your fingertips  

Offshoring, Wages, and Skill Premiums: Firm‐level Evidence from China

Liang Zhang, Bin Qiu, Xiaocong Xu and Shaoqin Sun

China & World Economy, 2021, vol. 29, issue 5, 1-27

Abstract: Using detailed Chinese manufacturing firm production and trade data from 2000 to 2006, this study finds that offshoring significantly increases firms’ average wages. First, using the quasi‐natural experiment of China's accession to the World Trade Organization, we investigate how a reduction in offshoring costs affects the manufacturing firm's wages and find that a productivity effect and a job‐relocation effect are two possible channels. Second, the dynamic decomposition of industry‐level wages indicates that the within‐firm effect is 0.547, accounting for 31.5 percent of the total variation. Finally, a Mincer‐type regression shows that offshoring also increases within‐firm skill premiums. Our findings have strong implications for the government related to framing appropriate industrial policies to raise wages and reduce income inequality.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1671-2234

Access Statistics for this article

China & World Economy is currently edited by Yongding Yu

More articles in China & World Economy from Institute of World Economics and Politics, Chinese Academy of Social Sciences Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().

Page updated 2024-07-01
Handle: RePEc:bla:chinae:v:29:y:2021:i:5:p:1-27