Study On The Impact Of Opening Up On The Wage Gap Among Inter-Industries In Chinese Manufacturing

In recent years, the relationship between opening up and income distribution became a hot topic among scholars. Supporters of globalization believe that opening up is beneficial to economic development. In a sense, it increases the size of the pie, but anti-globalization critics have suggested that it is socially malign on several dimensions, among them the question of Income gap. According to current research, in the long run, opening to the outside world better than a closed economy is a generally accepted view. However, as far as the effects of opening up on the income distribution, scholars are less reached a consensus. The effects of opening up on the income distribution are particularly important for developing countries, because income inequality in developing countries is very typical, and there are a large number of fragile and vulnerable populations. If economic integration leads to further widening the income gap and increasing poverty-stricken population, the benefits realization due to opening up is based on the greatly cost of increasing the social cost. As the world's biggest developing country, China is pushing forward reform and opening up policy for 30 years. Since 30 years, China's national economy achieved high growth and rapid integration into the world economy. China has become the world's third largest trading nation and the largest developing countries in FDI absorption in 2006. At the same time, China's income gap has been widening, as evidenced between regions, between urban and rural areas, the income gap among industries continued to widen, in which the income gap among industries to expand gradually aroused attention from all sides. Wage Gini coefficient in all industries of nationwide has gone up from 0.166 inl993 to 0.185 in 1996, and to 0.200 in 1999 and 0.218 in 2002. Opening up itself is a process of benefits redistribution and resources re-allocation. Exertion of Comparative advantage, the implementation of open-door policy promote the overall welfare of a country's economy welfare, at the same time, it also influences a country's wage distribution pattern and the wage gap among difference sectors. If the wage gap among industries expands beyond the bearing capacity of society, which will lead to various social problems arising from the hidden dangers. Therefore, it is important to comprehensively think and analyze the impacts of opening up on wage gap among industries in our country. The manufacturing industry is the most active areas of China's opening up. Rapid expansion of manufacturing imports and exports, as well as becoming the main sector of attracting FDI inflows, is the results of realizing industrialization and development strategy of opening up. Therefore, the changes of the the wage gap among inter-industries in Chinese manufacturing may be influenced more directly and more significantly by opening up. Therefore, from the perspective of opening up, using the manufacturing sector panel data and inter-provincial panel data, this article studies the impact of opening up on the wage gap among inter-industries in Chinese manufacturing. The following are the contents and basic conclusions:Firstly, based on the relevant theory and domestic and international literature review, using the relevant evaluation indicators about opening up, this paper investigate the overall degree of opening up, opening up geographical differences and open state of the manufacturing sector. The paper use wage inequality indicators, such as standard deviation, Theil index, Gini coefficient, extreme difference value of industry wage, extreme value ratio of industry wage, to analyze the changes trend of the wage gap among inter-industries in manufacturing. Article found that the wage gap among inter-industries in Chinese manufacturing trend to expanding in the process of opening up. In addition, the paper analyzes the role of channels by which opening up effect on the wage gap among inter-industries in manufacturing.Secondly, the paper establishes wage decision function about manufacturing industry based on the manufacturing sector panel data, and analyzes the impact of trade liberalization on manufacturing industries wage, then decompose the different roles of exports and imports. We find that export raises relative wage, but import lower relative wage. According to factor intensity to distinguish the types of manufacturing industries, trade liberalization has different effects on different types of industries in terms of impact strength and direction. We find that export raises relative wage of both labor-intensive sectors and capital-intensive sectors, but the impact of the latter than the former. Import raises relative wage of capital-intensive sectors, but lower that of labor-intensive sectors. The different impacts of exports and imports on different types of relative wage in manufacturing industries are likely to widen the wage gap among inter-industries in manufacturing.Thirdly, based on inter-provincial panel data, we make empirical testing that trade liberalization is likely to widen the wage gap among inter-industries in manufacturing. This paper studies the effect of trade liberalization on the wage gap among inter-industries in Chinese manufacturing. It finds that foreign trade enlarges the wage gap among inter-industries in Chinese manufacturing. When we separate the impact of exports and imports separately, we find import could significantly enlarge the wage gap among inter-industries in manufacturing. However, the effect of exports is uncertain. Foreign trade enlarges the wage gap among inter-industries in Chinese manufacturing, but there is a significant difference among the impacts of trade on the wage gap among inter-industries in manufacturing in the eastern, central and western regions. The effect of non-equilibrium may be objectively created a regional wage gap.Fourthly, based on inter-provincial panel data, the paper studies the impact of foreign direct investment which is another measure as opening up on the wage gap among inter-industries in manufacturing. We find that FDI has positive effect on reducing the wage gap among inter-industries in manufacturing. This role of FDI in the eastern, central and western regions has different intensity.Fifthly, based on inter-provincial panel data, the paper concludes that the cause of reducing the wage gap is due to enhance relative wages of low-wage in the manufacturing sector, but this role in the eastern, central and western regions are different. Therefore, FDI narrows the wage gap among inter-industries in manufacturing, but it has expanded the eastern, central and western regional wage gap.Lastly, from the perspective of opening up, some advices about improving the manufacturing industry wage and narrowing the wage gap among inter-industries in manufacturing and regional wage gap are given based on the above analysis. In addition, future research prospects are put forward.