Does International Trade Lead to Wage Disparity and Skill Polarization?Empirical Evidence from CFPS Data
This paper examines how the wage gap and skill distribution among differently skilled workers in China respond accordingly to trade integration.Using a panel data constructed from China Family Tracking Survey(CFPS)data and UN Comtrade data for the period 2010-2020,and controlling for endogeneity problems,we find that trade has a negative impact on the wage gap between middle and primary skilled laborers based on education received,while it has a positive impact on the wage gap between the senior and middle skilled groups.And the former has a negative effect on the mean value and distribution of labor skills,while the latter has a positive effect.Thus,foreign trade induces skill polarization,and the wage gap explains 50％of the role of trade-induced skill polarization.In addition,in the middle-aged group of workers and high-tech intensive industries,the income gap,especially the income gap between high and middle skill groups,brings about the problem of skill polarization.Given that the distribution of skills in a country affects future economic growth and inequality in the long run,it is crucial to understand the changes in the distribution of wage and income and to take them fully into account in the design of policies,and this paper makes relevant policy recommendations in the areas of labor security and educational support.
International tradeWage gapSkill polarizationHigh-skill intensive industry
万方数据
