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Globalisation and Inter-Industry Wage Differentials in China

Chris Milner, Juliane Scheffel () and Feicheng Wang

No 2016-02, Discussion Papers from University of Nottingham, GEP

Abstract: This paper explores the relationship between globalisation and inter-industry wage differentials in China by using a two-stage estimation approach. Taking advantage of a rich household survey dataset, this paper estimates the wage premium for each industry in the first stage conditional on individual worker and firm characteristics. Alternative measures of globalisation are considered in the second stage; trade openness and capital openness. The regressions do not reveal a significant relationship between overall trade (import and/or export) openness and wage premia. However, disaggregation of trade into trade in final and intermediate goods is shown to matter. Increases in import (export) shares of final goods reduce (increase) the wage premium significantly, whereas imports or exports of intermediate goods do not explain differences in industry wage premia. This finding is supported by stronger effects for final goods trade in coastal than non-coastal regions. Our results also show a positive relationship between capital openness and industrial wage premium, though this finding is less robust when endogeneity issues are allowed for.

Keywords: Globalisation; Industrial Wage Premium; China (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-int
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Journal Article: Globalization and inter‐industry wage differentials in China (2018) Downloads
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