Globalization and wage inequality: Evidence from urban China

Han, Jun; Liu, Runjuan; Zhang, Junsen

doi:10.1016/j.jinteco.2011.12.006

“…Many cross-country studies report that although globalization can promote economic growth, it would also lead to an increase in inequality (Borenstein, Gregorio, and Lee 1998;Basu and Guarglia 2007;Ezcurra and Rodríguez-Pose 2013). Similar observations can also be found in the PRC as reported by many researchers (Zhang and Zhang 2003;Nissanke and Thorbecke 2006;Ran, Voon, and Li 2007;Tsui 2007;Wan 2007Wan , 2008Wei and Ye 2009;Gries and Redlin 2011;Tian et al 2011;Han, Liu, and Zhang 2012).…”

Section: Introductionsupporting

confidence: 67%

The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-Based Decomposition Approach

Lee

¹

,

Cheong

²

,

Wu

³

2017

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Working papers are subject to formal revision and correction before they are finalized and considered published.Asian Development Bank Institute Kasumigaseki Building, 8th Floor 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org AbstractThis paper aims to study the impacts of financial development, urbanization, and globalization on income inequality in the People's Republic of China. It applies the regression-based inequality decomposition approach on a panel dataset, which is aggregated from a unique database of financial development so as to quantify the relative contributions of these three factors, along with other variables such as physical capital and human capital, to income inequality. The findings suggest that financial development, urbanization, and globalization exert a positive impact on income. However, the contributions of urbanization, foreign investment, physical capital, and human capital to regional inequality are positive. Moreover, it is found that financial development is crucial for promoting inclusive growth, since it can stimulate economic growth and is found to be an equalizing factor of inequality.

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“…At the end of sample period, increasing trade costs associated with the crisis can be associated with a moderate decline in employment for this skill group. 25 The job destruction for the middle-skill cluster that began in the early 1990s and continued during 21 The forecast error variance decomposition is in the technical appendix, where I show that productivity (technology) accounts for most of the variation in output and other real variables in the medium-to lung-run, consistent with the findings in Shapiro and Watson (1988) and Smets and Wouters (2007). Innovations to trade costs and intertemporal substitution play a more dominant role at shorter frequencies.…”

Section: An Asymmetric Shock To the Intertemporal Rate Of Substitutionmentioning

confidence: 54%

“…By contrast, the quantitative general equilibrium framework that I use in this paper is dynamic and stochastic. This framework allows me to apply the model directly to the data and study short-to medium-run dynamics 6 See for instance Goldberg and Pavcnik (2007) and Han et al (2012) for a discussion. Instead, the traditional HecksherOhlin/Stolper-Samuelson trade paradigm contradicts this fact.…”

Section: Related Literature and Modelling Approachmentioning

confidence: 99%

“…24 Smoothed (two-sided) estimates of all the unobserved shocks are not reported but are available upon request. 25 Ahn et al (2011) indicates that financial frictions lead to a trade credit freeze that resulted to increasing trade costs and a notable decline in global trade during the crisis.…”

Section: An Asymmetric Shock To the Intertemporal Rate Of Substitutionmentioning

confidence: 99%

See 1 more Smart Citation

Labor Market Polarization and International Macroeconomic Dynamics

Mandelman

¹

2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Abstract: During the last thirty years, labor markets in advanced economies were characterized by their remarkable polarization. As job opportunities in middle-skill occupations disappeared, employment opportunities concentrated in the highest-and lowest-wage occupations. I develop a two-country stochastic growth model that incorporates trade in tasks, rather than in goods, and reveal that this setup can replicate the observed polarization in the United States. This polarization was not a steady process: the relative employment share of each skill group fluctuated significantly over short-to-medium horizons. I show that the domestic and international aggregate shocks estimated within this framework can rationalize such employment dynamics while providing a good fit to the macroeconomic data. The model is estimated with employment data for different skills groups and trade-weighted macroeconomic indicators. Terms of use: Documents inJEL classification: F16, F41

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“…A similar pattern was observed between 1998 and 2000, and Xu and Li (2008) confirmed that the rise in wage inequality during the period was related to the rising skill demand by foreign-owned firms in the country. Han et al (2012) suggest that, by raising the returns to education, trade liberalization contributed to increase in wage inequality in the PRC.…”

mentioning

confidence: 99%

Human Capital Development in South Asia:

2017

6

0

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Globalization and wage inequality: Evidence from urban China

Cited by 144 publications

References 27 publications

The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-Based Decomposition Approach

The Impacts of Financial Development, Urbanization, and Globalization on Income Inequality: A Regression-Based Decomposition Approach

Labor Market Polarization and International Macroeconomic Dynamics

Human Capital Development in South Asia:

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