Abstract
This paper classifies the panel data of 26 manufacturing industries in China from 2003 to 2014 according to different factors intensive industries, and conducts an empirical study on the impact of international trade on the wage gap within the industry by building a dynamic panel data model and using systematic GMM method. The study finds that, as far as the overall manufacturing industry is concerned, international trade will narrow the wage gap within the industry. If international trade is further divided into export trade and import trade, export trade will narrow the wage gap in the manufacturing industry as a whole, narrow the wage gap in labor-intensive industries, and narrow the wage gap in capital-intensive industries whose effect is not significant. However, the import trade will expand the wage gap in the manufacturing industry as a whole, narrow the wage gap in labor-intensive industries, and widen the wage gap in capital-intensive industries whose effect is not significant.
Highlights
The phenomenon of anti-globalization began to emerge after the subprime mortgage crisis in America in 2008, economic globalization is still the mainstream of the world
The results showed that international trade led to the expansion of the wage gap in the manufacturing industry, while export trade increased the wage gap in labor-intensive industries
This paper uses the panel data of 26 manufacturing industries from 2003 to 2014 to analyze the impact of trade on the wage gap within the industry theoretically, and constructs the dynamic panel model to test the impact of trade on the wage gap empirically
Summary
The phenomenon of anti-globalization began to emerge after the subprime mortgage crisis in America in 2008, economic globalization is still the mainstream of the world. The wage gap between low-skilled workers and high-skilled workers widens. Feenstra and Hanson made the empirical study for this phenomenon, the results showed that the United States has outsourced a large number of relatively low-tech industries to developing countries and kept relatively high-tech industries at home which increased the demand for high-skilled workers and reduced the demand for low-skilled workers, there would be some corresponding changes in their wages. To test whether the same phenomenon had occurred during the same period in developing countries, Feenstra and Hanson used the relevant data of the Mexican workers in the 1980s to make empirical test, and found that Mexico’s border factories handled much of the outsourced production which was still high-tech for Mexico from the US. Since taking part in global trade, the income level of our domestic workers is rising with participating in the international trade, but the wage gap between high-skilled workers and low-skilled workers is widening. We choose the sample data of China’s manufacturing industry to investigate the impact of international trade on the wage gap empirically
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