The Research In The Effects Of Import Competition On Wage And Health Of Industrial Employees In China

With the accelerated process of global economic integration,trade liberalization has become an important development strategy for all countries.Since the early 1980 s,the strategy of combining “bringing in” and “going out” in opening up has gradually become a key component of China’s economics.With the remarkable achievements of export trade,import trade is also increasing in China.Since joining the WTO,China has continuously cut tariffs and non-tariff barriers,and emphasized the vital role of import trade in the world.However,while the import liberalization has brought rapid economic achievements,it may have a certain effect on the domestic market and enterprises.Especially,the entry of a large number of final products has resulted in intensified competition in the industry,for the manufacturing industry,which is mainly involved in the international trade,the pressure of import competition has also had a significant impact on the welfare of manufacturing workers.Hence,based on the background of liberalization,this article discusses how the import competition affects the performances of Chinese labor market,which is embodied in the aspects of employees’ wages and health,as well as the internal mechanism and potential logic of this impact.Moreover,this article further examines the role of the government in adjusting and protecting the local market under competitive pressure.The study of this article focuses on the theorical analysis and empirical tests of the effects of the import competition on employees’ wage and health.First,based on related theories,this article provides a theoretical basis for the study of wage and health effects of import competition,and constructs a two-sector model of open economy to describe how import competition affects them.Second,by combing the process of China’s import trade liberalization and the truth of the wage and health of China’s manufacturing industry employees at the present stage,this article points out the relationship between import competition and the employees’ wage and health,and puts forward the research hypothesis.Third,by constructing China’s import competition indicators at the urban-and industry-level,using the two-way FEs specifications,this article discusses the impact of import competition on the employees’ wages and health of China from the macro-urban,micro-enterprise and individual levels,investigates the transmission mechanism,and further studies the important adjustion role of China’s government.Finally,according to the empirical results,this article puts forward corresponding policy suggestions for China in the process of import trade liberalization.The results of this article document that,from a macro-level,import shocks may have an impact on the labor market,which affects employees’ wages and health through micro enterprise behaviors.Specifically,first,based on the facts at the city level,since joining the WTO,along with the relaxation of China’s entry restrictions on foreign products,import competition from abroad has reduced the wages of employees,but it has an obvious regional heterogenous effects.As the key connecting point of China’s foreign trade,the eastern cities suffer more competition intensity than the central and western cities,which leads to obvious impact on the employees in the eastern region.However,we further suggest that the government actions can effectively alleviate this effect of import competition,and give full play to the degree of adjustion in the market,which is conducive to the improvement of the welfare.Second,the impact of import competition on manufacturing wages mainly plays a role through enterprise behaviors.This article finds that import competition has produced a “Schumpeter effect” on Chinese enterprises,that is,the introduction of imported products leads to the squeeze of the local market share,and then as a result,the profits and productivity of local enterprises are reduced,and the probability of exiting the market is increased,resulting in a decline in the wage of employees.There is also heterogeneity in enterprises’ behaviors,it has a suppression effect on wages in non-state-owned enterprises,high-productivity enterprises,non-exporting enterprises,small-scale enterprises and capital-intensive industries.Moreover,the methods of the local government could significantly alleviate this effect of import competition,which includes important industry policy,financial subsidy and tax preference.Under the pressure of import competition,it indicates that the role of the government and the enterprises are all important.Finally,as import competition reduces the wages of employees,the obvious reduction of such incomes is not conducive to the health level of them.Through the empirical research in this article,it is also found that one of the main channels for this effect is from changes in the labor market.Moreover,this article also finds that import competition plays a role in employees’ health through their dietary structure.In the meantime,import competition shows different effects according to individual heterogeneity,emplyees in eastern region and them with lower education levels and local household registration are more vulnerable to import shocks,which further indicates that in the process of import liberalization,the key role of individuals in improving their own skills and exerting their own mobility.The conclusion of this study reveals the impact of import competition pressure on the welfare of Chinese employees,and further clarifies its internal mechanism.Therefore,under the general trend of import trade liberalization,how to deal with import pressure has become a key issue for the China’s economic system.On the one hand,it is necessary to give full play to the guiding role of local governments in the market economy,promoting the organic combination of effective market and promising government,creating a good external competition environment for enterprises,and effectively promoting the efficient operation of enterprises.On the other hand,local enterprises should give full play to their subjective capacities,increasing R&D and innovation,taking the capacities in market competition,effectively protecting the rights and interests of employees,and promoting skills training for them.Moreover,employees themselves should increase investment in education and improve the quality of labor to cope with external environmental shocks.