Global Production Networks, Way Of Trade And Wage Gap: Impact And Empirical Analysis

Global production networks places different fragment and segment,such as design,R&D, manufacture,marketing and sales in different countries and areas,with the trade structure changing from final goods to intermediate inputs.Outsourcing in GPNs induces more needs for high-skilled labor.Feenstra(1999,2000,2003) analyzed the changes of relative wages in America and Mexico by intermediate inputs not by finished goods.He found that trade in intermediate inputs,or a global production network is a potentially important explanation for the increase in the wage gap between skilled and unskilled workers.On the research of trade and relative wage inequality,most of scholars come from outsourcing,in which the developed import intermediate inputs and the developing export intermediate inputs,and they take intermediate inputs as labor-intensive inputs.Chinese increase of intermediate inputs trade is related with processing trade.With the import of parts and components exceeds to finished goods China has deeply come into the GPNs.On the other hand,GINI coefficient has been 0.45 and relative wage gap between skilled labor and unskilled labor has been enlarged.This paper includes the way of trade,welfare distribution,governance,human capital investment and relative wage gap in the researching frame of GPNs and argues that what's the relationship between wage gap and GPNs and how GPNs takes effect on wage gap.This paper takes the subdivision manufacturing into consideration such as fabrics and clothing,toy,electronics computer,auto;and builds econometrics model to explain how the intermediate trade,human capital investment works on the relative wage.From the theory of way of trade,whether intermediate trade in GPNs increases or decreases the relative wage gap are unclear,which depends on the manufacturing effect,substitute effect and industrial effect.This paper points out that the governance model of GPNs(including the captive model,the marketing model,the relational model,the modular model and the hierarchy model) can explain the status arrangement and welfare distribution of the firms,then take effect on the relative wage.The wage gap takes place through the two following channels:Continuing on the lower value chain has made China depressing the wage level of unskilled labor;on the other hand,the higher value chain will increase the needs for skilled labor and the wage gap means the difference of labor productivity.At the same time,the human capital accumulation system, including educational system,firm's training system,learning and doing,technological spill over, are not benefits for unskilled labor's capital accumulation.In the long term,GPNs will ease the influence on the wage gap through the bargaining power improved and the skill premium becoming ease.From the point of exterior governance,we analyze the labor union,Multinational- Corporation and institute of regulations(such as minimum wage,the changing of processing trade regulations),and discuss how these take effect on the wage gap.This paper finds out Chinese labor union is out of effect on wage bargaining.Corporate social responsibility hasn't take obligation on firms in the Nets.At the same time,government has changed the processing trade strategy which increased the firm's manufacturing cost and take bad effect on the employment. In the long term,GPNs will ease the effect on the wage gap.This paper chooses Guang dong, Zhe jiang,Jiang su,Shanghai,Liao ning,Fu jian,Shan dong,Bei jing,Tian jin from 1999 to 2006 to make panel data analysis.Since there is no available index to reflect the wage of relative wage,this paper uses the average wage of electronics and communication stands for skilled wage and the average wage of fabrics & clothing stands for unskilled wage.We show that export is positive on relative wage gap.The import is negative on relative wage gap.The fixed investment is positive on relative wage gap.The human capital investment is good for decreasing the wage gap,but as the need for high-skilled labor is more than the supply for high-skilled labor,more high-skilled labor will enlarge the wage gap right now.The model shows that trade in intermediate has impact on labor demand.This paper researches only on the manufacturing and doesn't consider the service trade which has been proved a new research area.We hope to continue researching on this new area.We suggest that firm upgrades the value chain and increases the manufacturing diffuse effect, transfer the lower value chain to improve the unskilled employment,improve minimum wage and human capital investment system.