Upstreamness,exports, and wage inequality: Evidence from Chinese manufacturing data |
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| Institution: | 1. Academy of Chinese Energy Strategy, China University of Petroleum, Beijing 102249, China;2. Department of Energy Economics, School of Economics, Renmin University of China, Beijing 100872, China;3. National Academy of Development and Strategy, Renmin University of China, Beijing 100872, China;4. School of Business Administration, China University of Petroleum, Beijing 102249, China;5. School of Foreign Languages, China University of Petroleum, Beijing 102249, China;1. Sao Paulo School of Economics-FGV and Michigan State University, Rua Itapeva 474, 12 andar, São Paulo, SP 01332-000, Brazil;2. University of Sussex, CEPR and CEP. Jubilee Building, University of Sussex, Falmer, Brighton, BN1 9SL, United Kingdom;3. Sao Paulo School of Economics-FGV, London School of Economics, CEPR, CEP and CESifo, Rua Itapeva 474, 10 andar, São Paulo, SP 01332-000, Brazil;1. School of Finance, Shanghai University of Finance and Economics, Shanghai, 200433, China;2. Shanghai Key Laboratory of Financial Information Technology, Shanghai University of Finance and Economics, Shanghai, 200433, China;3. Department of Economics, University of California, Davis, CA 95616, USA;4. NBER, USA;5. School of Economics, Fudan University, Shanghai 200433, China |
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| Abstract: | In this paper we investigate within-firm wage inequality across heterogeneous industries that hold different positions in the domestic value chain, and across heterogeneous firms that have different exposure to trade. We find that the wage inequality problem is more severe in upstream industries than in downstream ones, and among firms with greater exposure to trade (i.e., larger export share of sales). Our findings support both classic and new new trade theories on wage inequality. In downstream industries where Chinese firms are typically engaged in processing and assembly work with intensive use of unskilled labor, trade leads to less wage inequality within firms. However, trade also introduces pro-competitive effects which usually benefit exporters and their skilled labor. The results hold after various checks and controls for robustness. |
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| Keywords: | Wage inequality Upstreamness Exports |
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