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Globalisation and Inter-Industry Wage Differentials in China

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  • Chris Milner
  • Juliane Scheffel
  • Feicheng Wang

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.

Suggested Citation

  • Chris Milner & Juliane Scheffel & Feicheng Wang, 2016. "Globalisation and Inter-Industry Wage Differentials in China," Discussion Papers 2016-02, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:16/02
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    2. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender wage gap in China: a large meta-analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54, pages 1-17.
    3. Xinxin Ma & Ichiro Iwasaki, 2021. "Does communist party membership bring a wage premium in China? a meta-analysis," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 19(1), pages 55-94, January.
    4. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender Wage Gap in China: A Large Meta-Analysis," CEI Research Paper Series 2020-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    5. Liang Zhang & Bin Qiu & Xiaocong Xu & Shaoqin Sun, 2021. "Offshoring, Wages, and Skill Premiums: Firm‐level Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(5), pages 1-27, September.

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    Keywords

    Globalisation; Industrial Wage Premium; China;
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