Trade liberalisation, market competition and wage inequality in China's manufacturing sector

Anwar, Sajid, and Sun, Sizhong (2012) Trade liberalisation, market competition and wage inequality in China's manufacturing sector. Economic Modelling, 29 (4). pp. 1268-1277.

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Abstract

Economic reforms of the late 1980s have contributed to rapid economic growth in China. While the overall standard of living has improved, economic growth has also resulted in an increase in income inequality. Rising income inequality can increase social tensions that can impede further economic growth. By making use of firm level panel data, this paper focuses on the impact of increased market competition and trade liberalisation on skilled–unskilled wage inequality in China's manufacturing sector. A theoretical model is used to argue that trade liberalisation and market competition can affect skilled–unskilled wage inequality. Based on this result, an econometric model is specified. The empirical analysis presented in this paper shows that increased trade liberalisation has contributed to an increase in skilled–unskilled wage inequality in China's manufacturing sector. However, increase in market competition has the opposite effect.

Item ID: 21572
Item Type: Article (Refereed Research - C1)
ISSN: 1873-6122
Date Deposited: 08 Jul 2012 23:25
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140209 Industry Economics and Industrial Organisation @ 60%
14 ECONOMICS > 1402 Applied Economics > 140211 Labour Economics @ 40%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910203 Industrial Organisations @ 60%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910208 Micro Labour Market Issues @ 40%
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