Title: Industry openness, firm characteristics, and wage inequality: evidence from Chinese manufacturing firms

Authors: Qiong Huang; Satish Chand

Addresses: School of Business, University of New South Wales, Canberra, Australia ' School of Business, University of New South Wales, Canberra, Australia

Abstract: Recent literature has cited trade liberalisation as a major cause for the growth of wage inequality in developing countries. This study uses primary data from 670 Chinese manufacturing firms, together with the newly introduced regression-based inequality decomposition method, to investigate the impact of industry openness on wage inequality. The empirical analysis shows that industry openness leads to a positive industry wage premium, and thereby contributes to the inter-industry wage inequality. However, the decomposition results suggest that the contribution industry openness to the wage inequality, although positive, is relatively small at 4.69%. The major contributor to the wage inequality is firms' difference in human capital, which accounted for 14.3%.

Keywords: openness; wage inequality; decomposition; China.

DOI: 10.1504/IJEPEE.2017.083897

International Journal of Economic Policy in Emerging Economies, 2017 Vol.10 No.1, pp.98 - 108

Available online: 24 Apr 2017 *

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