Foreign direct investment, intellectual property rights, and wage inequality in China |
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Authors: | Xiaodong Wu |
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Institution: | Department of Economics, University of North Carolina at Chapel Hill, Gardner Hall 304, CB#3305, Chapel Hill, NC 27599, USA |
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Abstract: | This article incorporates foreign direct investment (FDI) and product differentiation in a general equilibrium trade model. The analysis shows that freer trade and FDI will upgrade China's technology, improve its skills of labor, and increase the competitiveness of local firms in the international market. At the same time, the relative wage of skilled labor to unskilled labor will rise. The size of this rise will be affected by the degree of protection for intellectual property rights. These theoretical results are consistent with empirical evidence. The analysis provides insights in coordinating policies on FDI, labor market reform, and intellectual property rights protection. |
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Keywords: | Wage inequality FDI Product quality Intellectual property rights |
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