Dissertation > Economic > Economic planning and management > Labor Economics > Countries in the world of labor economic profile > China > Labor and wage

The Effect of International Trade and Technology Change on China’s Manufacturing Wage Gap

Author ZhuQingLian
Tutor XiongWeiQing
School Ningbo University
Course International Trade
Keywords International trade wage gap technological progress Theoreticalanalysis Empirical Analysis
CLC F249.24
Type Master's thesis
Year 2013
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The development of international trade brings advanced technology to china. Technologicalprogress has changed the labor productivity of various departments, which lead to wage gap widenin china. In this paper, we studied the wage gap occurred in manufacturing industry. How doImport and export trades impact on manufacturing industry wages? Does Technological progressincrease or reduce the industry wage gap? Meanwhile, are these effects different from other typesof industry? In order to solve these problems, this paper carried out the study as follows:First, we collect the dates of import and export trade, enterprise innovation capital spendingand average wage of27Chinese manufacturing industry segments from1995to2010. Weestimates several wage gap indicators, such as: GINI coefficient, THEIL index and so on. Thewage gap indicators show that manufacturing industry wage gap expanding in the opening-upprocess, but fluctuate always. The growth rate of the wage gap rises before year of2002anddeclines after year of2002.Second, theoretical model is established which contains international trade, technologicalprogress and the wage gap. Conclusions are as follow: the technical spillover effect of trade and theincrease of enterprise innovation capital have led to the increase of high-skilled worker’s wage, thedecrease of low-skilled worker’s wage, thus widening the wage gap.Third,In Empirical analysis,27Chinese manufacturing industry segments are divided into thelabor-intensive and technology-intensive sectors according to factor intensity. Static panel datamodel and dynamic panel data model are established to explain the phenomenon of our inter-industry wage gap from the perspective of import and export, trade, and technologicalprogress.The empirical results show that:(1)Whether import trade or technical progress will lead to increased demand for highly skilledworkers, the wage gap is widening; export trade will narrow China’s manufacturing industry wagegap;(2) The import trade is the main reason to cause the labor-intensive sector wage gap;technological progress is the main reason to cause the technology-intensive sector wage gap;exports reduce the relative wage gap of the two departments. (3) Increase of enterprise innovation capital widens China’s manufacturing industry wage gap,but it will reduce the growth rate of the wage gap in the long term. The degree of enterprises toparticipate in international trade has inversely proportional to industry wage gap.At last, this paper presents the relevant policy recommendations.

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