Destination Income and High-skilled Labor Demand in Chinese Exporters
Human capital accumulation is a key driver of economic growth,and numerous studies indicate that international trade and its structure play a significant role in a country's human capital change.Therefore,it is important to examine whether the current structure and model of trade contribute to the sustained enhancement of China's human capital.Since China's accession to the World Trade Organization(WTO),trade has exhibited many new characteristics.From 2000 to 2010,China traded with 228 countries or regions,with most exporters having experience exporting to high-income economies.Trade with high-income economies,on one hand,helps attract industry transfers from these countries,promoting industrialization in China;on the other hand,it might also lead to a"low-end lock-in"of China's manufacturing industry by high-income economies.Therefore,it is crucial to understand how trading with economies at different income levels affects China's human capital.The high-skilled structure of exporters is an important index of human capital.To investigate the above issues,this paper mainly uses data from three sources:firm skill structure information from the 2004 and 2008 China National Economic Census data;China Annual Survey of Industrial Firms;and the China Customs data.The data from listed companies are used to extend this study to 2015.A result different from existing literature is found,the relationship between destination income and the proportion of high-skilled labor employed by Chinese exporters exhibits a U-shaped characteristic,initially decreasing and then increasing.To understand this result,this paper firstly constructs a theoretical model,incorporating the mechanisms of comparative advantage and quality preference into the framework of determining the skill structure of exporters,to depict the U-shaped relationship between destination income and the skill structure of exporters.Secondly,to ensure the robustness and validity of the result,this paper focuses on addressing the following problems.(1)To address the endogeneity problem between destination income levels and the skill structure of exporters,this paper selects multiple instrumental variables to alleviate concerns about endogeneity,including firm-level exchange rate shocks.(2)To ensure the robustness of regression results,this paper conducts the sensitivity analysis by varying the core explanatory and dependent variables and adjusting the regression sample.This paper conducts the empirical analysis at a micro level of firm-product to avoid potential estimation biases from macro aggregation.(3)To discuss the external validity of the results.This paper also extends the research sample to 2015 using listed company data to examine whether the conclusions of this paper remain meaningful in the long term.Based on ensuring the reliability of benchmark regression results,this paper empirically tests the quality preference and comparative advantage mechanism,ensuring the consistency between theoretical and empirical results.Compared to previous studies,this paper's marginal contributions are reflected in the following aspects.Firstly,this paper incorporates both supply and demand into a unified analytical framework to explain the U-shaped relationship between destination income levels and the skill structure of exporters,substantiating this relationship from both theoretical and empirical perspectives.Secondly,it addresses the problem of endogeneity well.Compared to existing literature,this paper is the first to build separate instrumental variables for the components affecting the destination income of exporters,thus resolving the endogeneity between destination income and skill structure more effectively.Thirdly,it expands the research subjects to include middle-and low-income economies.Fourthly,it uses panel data to ensure the accuracy of estimated coefficients.Unlike previous literature that uses cross-sectional data,this paper constructs panel data and employs a fixed effects model for empirical analysis.This approach can avoid the interference of confounding factors on the estimation results.Fifthly,this paper also uses listed company data to test the external validity of the U-shaped relationship between export destination income and the skill structure of exporters.Sixthly,this paper empirically demonstrates the significance of strengthening economic and trade relations with countries along the Belt and Road.
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