The Effect Of Export Sophistication On Relative Wage Gap In China

With the development of economy and international trade in China, the export sophistication has attracted a lot of scholars to carry out researches. The increase in export sophistication will affect the demand for skilled labor, causing changes in their wages. Whether this will influence the wage gap between skilled and unskilled labor has led to this paper.After reviewing the previous literature, this paper analyses the way export sophistication affects the wages of skilled labor and unskilled labor from the perspective of trade and technological progress. Then export sophistication and wage gap of China’s manufacturing sub-sectors are present. When it comes to measuring export sophistication, the paper chooses to the method to exclude the imported intermediate goods, calculating indicators of domestic technical content. Based on the former analysis, the paper studied the effect of export sophistication on relative wage gap between skilled labor and unskilled labor by empirical analysis. Results are as follows:(1) The impact of export sophistication on the wage gap is negative, indicating that our technological progress is more unskilled-biased.(2) Foreign direct investment can generate a positive impact on the relative wage gap between skilled and unskilled labor through direct effect, technology spillover, competition effect, learning effect and so on.(3) The relative employment of skilled labor that provides more skilled labor for the market has a negative effect on the average wage gap and a positive one on total wage gap between the skilled and unskilled labor.Finally, based the conclusions, the paper gives advices in terms of personnel training, technological progress and the income distribution system.