Industry Openness, Human Capital and Wage Inequality: Evidence from Chinese Manufacturing Firms

This paper uses a primary data from 670 Chinese
manufacturing firms, together with the newly introduced regressionbased
inequality decomposition method, to study the effect of
openness on wage inequality. We find that openness leads to a
positive industry wage premium, but its contribution to firm-level
wage inequality is relatively small, only 4.69%. The major
contributor to wage inequality is human capital, which could explain
14.3% of wage inequality across sample firms.
 

Authors:

• Qiong Huang
• Satish Chand

Keywords:

• Openness
• human capital
• wage inequality
• decomposition; China.

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