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Trade Liberalization And Labor Shares In China

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  • Fariha Kamal
  • Mary E. Lovely
  • Devashish Mitra

Abstract

We estimate the extent to which firms responded to tariff reductions associated with China’s WTO entry by altering labor’s share of value. Firm-level regressions indicate that firms in industries subject to tariff cuts raised labor’s share relative to economy-wide trends, both through input choices and rent sharing. Labor’s share of value is an estimated 12 percent higher in 2007 than it would be if tariffs had remained at their 1998 levels. There is significant variation across firms: the impact is larger where market access is better and it is influenced by union presence and state ownership.

Suggested Citation

  • Fariha Kamal & Mary E. Lovely & Devashish Mitra, 2014. "Trade Liberalization And Labor Shares In China," Working Papers 14-24, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:14-24
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    Cited by:

    1. Robert Z. Lawrence, 2015. "Recent Declines in Labor's Share in US Income: A Preliminary Neoclassical Account," Working Paper Series WP15-10, Peterson Institute for International Economics.
    2. Bridgman, Benjamin, 2018. "Is Labor'S Loss Capital'S Gain? Gross Versus Net Labor Shares," Macroeconomic Dynamics, Cambridge University Press, vol. 22(8), pages 2070-2087, December.
    3. Aneli Bongers, 2021. "Economic growth and the functional distribution of income: A labor share Kuznets curve," Economics Bulletin, AccessEcon, vol. 41(1), pages 192-200.
    4. Kacou, Kacou Yves Thierry & Kassouri, Yacouba & Evrard, Talnan Hongwopena & Altuntaş, Mehmet, 2022. "Trade openness, export structure, and labor productivity in developing countries: Evidence from panel VAR approach," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 194-205.
    5. Devashish Mitra, 2019. "Responses to Trade Opening: Evidence and Lessons from Asia," Working Papers id:12977, eSocialSciences.
    6. Benjamin Bridgman & Ryan Greenaway‐McGrevy, 2022. "Public enterprise and the rise and fall of labor share," Economic Inquiry, Western Economic Association International, vol. 60(1), pages 320-350, January.
    7. Turgut Ozkan & Gozde Yanginlar & Salih Kalayci, 2016. "Railway Transport Liberalization: A Case Study of Various Countries in the World," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 6(4), pages 140-148, December.
    8. Dobbelaere, Sabien & Wiersma, Quint, 2020. "The Impact of Trade Liberalization on Firms' Product and Labor Market Power," IZA Discussion Papers 12951, Institute of Labor Economics (IZA).
    9. Leblebicioğlu, Asli & Weinberger, Ariel, 2021. "Openness and factor shares: Is globalization always bad for labor?," Journal of International Economics, Elsevier, vol. 128(C).
    10. Quint Wiersma, 2019. "The impact of WTO accession on Chinese firms' product and labor market power," Tinbergen Institute Discussion Papers 19-037/V, Tinbergen Institute.
    11. Tao, Jin & Ho, Chun-Yu & Luo, Shougui & Sheng, Yue, 2019. "Agglomeration economies in creative industries," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 141-154.

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