Trade, Foreign Direct Investment and Wage Inequality in China: A Heterogeneous Firms Approach

Theresa Greaney and Yao Li ()
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Yao Li: School of Management and Economics, University of Electronic Science and Technology of China, Chengdu, Sichuan 611731, P. R. China

China Economic Policy Review (CEPR), 2013, vol. 02, issue 02, 1-49

Abstract: We apply insights from the heterogeneous firms' literature to an empirical investigation of wage inequality in China, focusing on the potential influences of foreign direct investment (FDI) and trade. Using firm-level data, we examine intra-sectoral wage inequality in a major industrial region with firms identified according to five firm ownership types and three exporter status types. We find large ownership-type wage premiums separate from other observable influences on wages, including a firm's exporter status. Our results indicate that ownership type matters more than exporter status as a determinant in explaining intra-sectoral wage inequality in China's Yangtze River Delta (YRD). We also find evidence of asymmetric wage effects of firm type by exporter status and by other wage determinants.

Keywords: Exporter; pure exporter; foreign direct investment; wage premium; manufacturing; China (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1142/S1793969013500064

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