Wage Inequality and Input Trade Liberalization
Author: Chen Bo
Publisher:
Published: 2013
Total Pages: 0
ISBN-13:
DOWNLOAD EBOOKThis paper investigates how input trade liberalization affects fiijrm-level wage inequality between skilled and unskilled labor. A fall in input tariffs generates increased fiijrm proጿits, which, in turn, widens wage inequality since skilled labor enjoys a larger proportion of the incremental proጿits. We analyze this type of channel with an augmented Amiti-Davis (2012) model. Using Chinese fiijrm-level production data, we fiijrst estimate and calculate fiijrm-level wage inequality, which is found to be much greater than that in the U.S. After controlling for possible endogeneity, we ጿind evidence consistent with our theoretical prediction that input trade liberalization widens within-fiijrm wage inequality.