26 Pages Posted: 23 Dec 2007
China has experienced rising wage inequality due to rising relative demand for skilled labor. In this paper, we use a sample of 1,500 firms to investigate the impact of trade and technology on China's rising skill demand. We find that export expansion had a negative direct effect (Heckscher-Ohlin type) and a positive indirect effect (export-induced skill-biased technical change) on skill demand; the net effect was found positive and accounted for 5 percent of rising skill demand of the sample firms. We find that technical change in Chinese firms was on average skill-neutral, but majority foreign-owned firms experienced skill-biased technical progress that accounted for 22 percent of the rising skill demand of the sample firms.
Suggested Citation: Suggested Citation
Xu, Bin and Li, Wei, Trade, Technology, and China's Rising Skill Demand. Economics of Transition, Vol. 16, Issue 1, pp. 59-84, January 2008. Available at SSRN: https://ssrn.com/abstract=1077999 or http://dx.doi.org/10.1111/j.1468-0351.2007.00314.x
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