Abstract
This research discussed the relationship and mechanism between trade liberalization and the wage level of enterprises. Using the firm-level data from Annual Survey of Industrial Firms(ASIF) database and tariff data from World Bank, we find that, the final goods trade liberalization will reduce the wage, while the intermediate goods trade liberalization will improve the level of enterprises' wages. And that trade liberalization affects wages through firm performance. The reduction of input tariff reduces firm’s input cost, and increases firm’s sales and profit, then the firm has more ability to provide higher wages. While the decline of output tariff damages firm’s performance, which leads enterprises to transfer the loss by reducing wages.
Highlights
In the late 1970s, China formulated the economic development policy of reform and opening up, and began to participate in the economic process of other countries and regions in the world
The regression coefficient of the output tariff is positive, which indicates that the trade liberalization of the final product leads to the decline of the wage level, while the decline of the intermediate product tariff will lead to the rise of the wage level
The control variables related to enterprise characteristics are added, and the regression results show that the wage level is positively related to output tariff level, and negatively related to the input tariff level
Summary
In the late 1970s, China formulated the economic development policy of reform and opening up, and began to participate in the economic process of other countries and regions in the world. In the 1990s, China actively prepared to join the World Trade Organization (WTO), began to unilaterally reduce tariff and non-tariff barriers, and gave more and more enterprises the right of direct trade. After China's formal accession to the WTO in December 2001, it further cut tariffs. With the deepening of trade liberalization, China's personal income gap, regional income gap, and urban-rural income gap are getting worse. The 2018 report on China's labor market development issued by Beijing Normal University shows that there are significant differences in the balance of China's regional labor market. The wage differences between urban and rural areas, regions and industries are very obvious, and the income gap is at a high level
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