Globalization, Trade, and Wages: What Does History Tell Us About China?

38 Pages Posted: 25 Jan 2014

See all articles by Kris James Mitchener

Kris James Mitchener

Santa Clara University

Se Yan

Peking University - Guanghua School of Management

Date Written: February 2014

Abstract

Newly assembled data show that, as China opened up to global trade during the early 20th century, its exports became more unskilled‐intensive and its imports more skill‐intensive. Difference‐in‐differences estimates show that World War I dramatically increased Chinese exports, raising the relative demand for the unskilled workers producing them. When the war ended, trade costs declined and China's terms of trade increased, further stimulating exports. A simulation of a dynamic general equilibrium model demonstrates that the effects of the war on China's terms of trade produces a decline in the skill premium similar to what China experienced in the 1920s.

Suggested Citation

Mitchener, Kris James and Yan, Se, Globalization, Trade, and Wages: What Does History Tell Us About China? (February 2014). International Economic Review, Vol. 55, Issue 1, pp. 131-168, 2014. Available at SSRN: https://ssrn.com/abstract=2384230 or http://dx.doi.org/10.1111/iere.12044

Kris James Mitchener (Contact Author)

Santa Clara University

Se Yan

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

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