Domestic Distribution Of Income And Employment Effects Of The Change Of China's Export Structure Analysis: The Dual Economic Structure Perspective

The income distribution and employment effects of free trade have always been the hot topics in the field of international trade theory. According to the traditional Stolper-Samuelson Theorem (SS Theorem), free trade will increase the earnings of those who own the abundant factors of production, and make those who own the scarce factors suffer a loss. Undoubtedly, China is a nation endowed with abundant labor force, and relatively insufficient capital and technology. However, with the development of China's foreign trade, the relative income of unskilled workers does not rise significantly as is expected by SS Theorem, and the income gap between skilled and unskilled workers is still widening. China owns a significant dual economic structure, and a large number of urban and rural surplus labor force. Based on the realistic situation of China, we look into the influence of different types of exports on the remuneration and usage of labor force in China both from the theoretical and empirical point of view, taking into account the endogenous and exogenous changes of labor and capital factors.The results show that, China's export structure will have both direct and indirect impacts on domestic income distribution as well as the total amount and structure of employment, not only through price mechanism, but also through many other channels. Overall, foreign trade will enlarge China's income gap. The increase of China's foreign trade dependency will broaden the income gap between urban and rural areas, and meanwhile, the expansion of export scale will increase the income differences between the skilled and un-skilled workers. Exporting resource-intensive products will narrow the income gap between urban and rural areas. As for the labor-intensive products, the increasing exportation of those products will significantly enlarge the income gap between urban and rural areas, but has no obvious influence on income distribution within cities. In the aspects of employment, exporting labor-intensive products will promote domestic employment. However, its role in absorbing the labor force has become smaller and smaller. In recent years, the increasing number of mechanical and electrical products exportation will enlarge the income gap between skilled and unskilled workers, and it will also have a positive effect on domestic employment. At present, the higher level of China's urbanization will enlarge the income differences as a whole.