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Regional differences in wage inequality across industries in China

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  • Ann Owen
  • Bing Yu

Abstract

Using a panel of 29 provinces over the years 1995-2001, we explore the large regional variation in industry wage differentials in China and examine the provincial characteristics that are consistent with greater inequality. We find that the effect of foreign direct investment (FDI) varies by province. One of the reasons that FDI can have differential effects is that the type of FDI (export vs. import-oriented) varies substantially across the provinces. Export-oriented FDI raises the wages of workers in industries that rely more on unskilled workers and lowers the wages of workers in industries that rely more on skilled workers, lowering the industry differential.

Suggested Citation

  • Ann Owen & Bing Yu, 2007. "Regional differences in wage inequality across industries in China," Applied Economics Letters, Taylor & Francis Journals, vol. 15(2), pages 113-116.
    • Handle: RePEc:taf:apeclt:v:15:y:2007:i:2:p:113-116
    DOI: 10.1080/13504850600770921
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    References listed on IDEAS

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    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    2. Zhiqiang Liu, 2001. "The effects of economic reforms on wage inequality: some evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 285-288.
    3. Zhao, Yaohui, 2001. "Foreign direct investment and relative wages: The case of China," China Economic Review, Elsevier, vol. 12(1), pages 40-57.
    4. Xiaodong Wu, 2001. "The impact of foreign direct investment on the relative return to skill," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(3), pages 695-715, November.
    5. Qingbin Wang & Guanming Shi & Yi Zheng, 2002. "Changes in income inequality and welfare under economic transition: evidence from urban China," Applied Economics Letters, Taylor & Francis Journals, vol. 9(15), pages 989-991.
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    Cited by:

    1. Audretsch, David & Sanders, Mark, 2007. "Globalization and the Rise of the Entrepreneurial Economy," CEPR Discussion Papers 6247, C.E.P.R. Discussion Papers.

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