Working Paper: NBER ID: w16575
Authors: John Whalley; Chunbing Xing
Abstract: We document and discuss the implications of a sharp increase in the regional dispersion of skill premia in China in recent years. This has previously been little noted or discussed. We use three urban household surveys for 1995, 2002, and 2007 and estimate skill premia at provincial and city levels. Results show an increase in the skill premium across all regions between 1995 and 2002, but only coastal regions show significant increases in skill premia between 2002 and 2007. For 2007, coastal regions also have much higher within region wage inequality and this contributes more to overall urban wage inequality than within region inequality of non-coastal regions. Using a fixed effects model at city level, we find that ownership restructuring is a significant factor in driving up skill premia during the first period, and that the ongoing process of China's integration into the global economy plays a significant and regionally concentrated role in the second period.
Keywords: skill premium; urban inequality; China; globalization; regional disparities
JEL Codes: J00; J01; J30; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ownership restructuring (G34) | increase in skill premia (J24) |
| ownership restructuring (G34) | structural changes in the labor market (J40) |
| structural changes in the labor market (J40) | increase in skill premia (J24) |
| integration into the global economy (F69) | increase in skill premia (J24) |
| integration into the global economy (F69) | wage inequality dynamics (J31) |
| 10% increase in export share (F14) | 11% increase in skill premiums (J24) |
| trade exposure (F14) | skill premium dynamics (J24) |
| institutional changes (O17) | skill premium dynamics (J24) |