Effects of global trade integration on skill polarization and wage disparity

Shuyun Chen, Fang Luo, Ting Xiao and Liang Ding ()
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Shuyun Chen: Jiangxi Institute of Fashion Technology
Fang Luo: Jiangxi Institute of Fashion Technology
Ting Xiao: Jiangxi University of Finance and Economics
Liang Ding: Guangdong University of Foreign Studies

Palgrave Communications, 2025, vol. 12, issue 1, 1-12

Abstract: Abstract This paper examines how the wage gap and skill distribution among workers with different skills respond to trade integration. Using Chinese city-level data for 2010–2020, we find that trade has a negative impact on the wage gap between middle and primary skilled workers based on their education, and a positive impact on the wage gap between high and middle skilled groups. The former has a negative effect on the mean value and distribution of labor skills, while the latter has a positive effect. Therefore, international trade activities will induce the problem of skill polarization, and the wage gap can explain 50% of the effect of trade on skill polarization. In addition, in the middle-aged group of workers and high-tech intensive industries, the income gap, especially the income gap between high and middle skill groups, brings about the problem of skill polarization.

Date: 2025
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DOI: 10.1057/s41599-025-05779-8

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