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Access to Imported Intermediates and Intra-Firm Wage Inequality

Ying Ge (), Tony Fang () and Yeheng Jiang
Additional contact information
Ying Ge: School of International Trade and Economics, Beijing
Tony Fang: Memorial University of Newfoundland
Yeheng Jiang: Chinese Academy of Forestry

No 12246, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We use Chinese firm-level data from the World Bank Investment Climate Survey to examine the link between importing intermediates and intra-firm wage inequality. Our results show that intermediate input importers not only have a significant wage premium but also have a greater intra-firm wage dispersion than non-importing firms. This pattern is robust when we control for productivity and use trade costs as the instruments. We further investigate the mechanism of how importing intermediates might contribute to both inter-firm and intra-firm wage inequality. Our evidence is consistent with three important channels. First, imported intermediate inputs complement skilled labour. Second, intermediates importers are more likely to use performance pay. Third, imported inputs complement innovation and employee training.

Keywords: world bank investment climate survey; wage inequality; global production sharing (search for similar items in EconPapers)
JEL-codes: F16 F63 F66 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-int and nep-lma
Date: 2019-03
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Forthcoming in: World Economy, 2019.

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