| ID | 181614 |
| Title Proper | Offshoring, Wages, and Skill Premiums |
| Other Title Information | Firm-level Evidence from China |
| Language | ENG |
| Author | Zhang, Liang |
| Summary / Abstract (Note) | Using detailed Chinese manufacturing firm production and trade data from 2000 to 2006, this study finds that offshoring significantly increases firms’ average wages. First, using the quasi-natural experiment of China's accession to the World Trade Organization, we investigate how a reduction in offshoring costs affects the manufacturing firm's wages and find that a productivity effect and a job-relocation effect are two possible channels. Second, the dynamic decomposition of industry-level wages indicates that the within-firm effect is 0.547, accounting for 31.5 percent of the total variation. Finally, a Mincer-type regression shows that offshoring also increases within-firm skill premiums. Our findings have strong implications for the government related to framing appropriate industrial policies to raise wages and reduce income inequality. |
| `In' analytical Note | China and World Economy Vol. 29, No.5; Sep-Oct 2021: p.1-27 |
| Journal Source | China and World Economy Vol: 29 No 5 |
| Key Words | WTO ; Wage ; Accession ; Offshoring ; Skill Premiums |