Analysis On The Influences That Intra-product Specialization Has On China’s Income Disparity

The tide of economic globalization has been sweeping every corner of our country since the reform and opening up, reaching from the coastal area to the western region, from the revitalization of old industrial bases in Northeast areas to Central areas. As a result, our life has been improved. Nevertheless, our country has witnessed the phenomenon of widening income gap, covering all industries and districts. In the year of2012, China’s Gini coefficient reached0.474.This is mainly due to the imbalance of intra-product specialization in the eastern, central and western regions and different industries. At the level of industry, workers’skill requirements are different because each industry involves different technical complexity. The demand for skilled labor is higher in industries which participate in the production of high technical complexity, while the demand for unskilled labor is higher in industries which participate in the production of low technical complexity. Therefore, there is no doubt that intra-product specialization has some impact on industry income gap within our country. In addition, due to the distinct advantage in the opening-up policy, geographical environment and human capital accumulation in eastern region, it has attracted a lot of foreign investment and has a higher degree of participation in intra-product specialization. Relatively, because of the low degree of openness in the central and western regions, the state-owned enterprises still account for a large proportion in these areas. As a result, they have a lower degree of participation in intra-product specialization than the eastern region. Therefore, intra-product specialization maybe show some influences on regional income disparity in our country. Based on theoretical analysis and empirical research of predecessors, this paper analyze the impact of intra-product specialization on our industry, regional income gap from the point of view of industry and region using the industry, regional panel data model respectively. The results show that, participation in the international intra-product specialization is the main reason of the widening income gap of our country’s labor. The level of intra-product specialization of labor-intensive industries is higher than that of the capital-intensive industries. The level of intra-product specialization of eastern region is higher than the central and western regions. Import of intermediate goods has negative effect on income gap of labor-intensive industry, and has positive effect on income gap of capital-and technology-intensive industry. The influence of export of intermediate goods are both positive. The deepening of the degree of intra-product specialization within eastern region is conducive to narrowing the income gap in the region, while the effect is opponent in the central and western regions. The empirical results reflect the real situation in China, providing a new way to make appropriate policy recommendations from the point of view of intra-product specialization.