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Access to imported intermediates and intra‐firm wage inequality

Author

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  • Ying Ge
  • Tony Fang
  • Yeheng Jiang

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.

Suggested Citation

  • Ying Ge & Tony Fang & Yeheng Jiang, 2019. "Access to imported intermediates and intra‐firm wage inequality," The World Economy, Wiley Blackwell, vol. 42(8), pages 2364-2384, August.
    • Handle: RePEc:bla:worlde:v:42:y:2019:i:8:p:2364-2384
    DOI: 10.1111/twec.12793
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    Cited by:

    1. Liping Zhou & Honglin Yuan, 2024. "Effects of digital trade export on wage inequality among enterprises: evidence from China," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-16, December.
    2. Dagmara Nikulin & Joanna Wolszczak-Derlacz & Aleksandra Parteka, 2021. "GVC and wage dispersion. Firm-level evidence from employee–employer database," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 16(2), pages 357-375, June.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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