| Since the1990s, China’s foreign direct investment as well as the import and export trade has maintained a rapid growth. However, the wage gaps between different levels also tend to become larger and larger. With the rising concern, people start thinking about the impacts that the rapid development of foreign economic ties has on wage gap expansion. According to the existing literature, studies were mostly focused on only one single level or from a macro perspective. Meanwhile, they did not pay enough attention to the specific circumstances of developing countries, especially our own nation. Although domestic scholars have recognized the importance of this issue and have conducted some relevant theoretical and empirical studies, we still fail in forming a systematical framework and a unified conclusion. Based on this, this essay will carry out a study on the impact channels and mechanism as well as impact degrees of FDI and its international trade between different regions and industrial sub-sectors as well as high and low skilled workers systematically from the theoretical and empirical level. It is hoped that the study will enrich relevant research in our country and make up for the lack of academic research in this regard.There are seven chapters in this essay. The first chapter introduces the background and significance of this research, including research ideas, research methods, theoretical and practical significance, and the definitions of some key concepts. From the theoretical and empirical research dimensions, the second chapter concludes and evaluates the latest research results of international trade and FDI affecting the national wage income gap, which constitutes the basis of theoretical basis and empirical testing in this essay. The third chapter analyzes the different effects of FDI and international trade on wage gap and discusses the three channels that affect the wage gap from theoretical angle. Research result shows that apart from the direct influence on wage gap, international trade and FDI also affect the wage gap indirectly through technology spillover and its influence on the labor market of the host country and product markets.By means of descriptive statistical analysis methods, the forth chapter introduces the development and characteristics of FDI and international trade in our country, as well as their surface relationship with wage gap. Through a careful study of history and reality, some other variables that may affect the wage gap in China are also extracted. Then the fifth and sixth chapters take an empirical test of the analysis in the past three chapters. By using panel data model from the level of regional and industrial sub-sectors, the fifth chapter conducts empirical tests on the effects of international trade and FDI on overall wage gap in our country. Results show that there is an obvious wage gap between high and low skilled workers among and within different regions, and the degree of external economic ties (including the total imports and exports, FDI) expands wage gap between high and low skilled workers among and within different regions. Since the majority of China’s export products are in low-skill-intensive manufacturing industry, the scale of demand for low-skilled labor is larger. However, such labor market in our country can’t be completely cleared up, so it hasn’t intrigued substantial changes to the factor of price of low-skilled workers. On the contrary, the increasing demand for high-tech workers due to the difference of the regional foreign trade and FDI, promotes a wage increase of high-tech personnel, thus widening the wage gap between high and low skilled workers among and within regions. As far as industrial sub-sectors, the technology spillover of FDI improves the average wage level of the high and low-skilled workers both inter-industry and in this industry. Meanwhile, the increase margin isn’t so huge that the wage gaps among industries are narrowed. The same goes for the trade of intermediate goods, especially the trade in primary products, labor and resource-intensive products which narrow the wage gap between high and low skilled workers within industry, namely FDI and trade are beneficial for narrowing the wage gap between high and low skilled workers among and within industry. The sixth chapter conducts empirical testing from the following aspects:the channel of FDI, trade-affected areas, wage gap between high and low skilled workers.For the channel of technology spillover, district level technology spillover expands the wage gap between high and low skilled workers, while industry level technology spillover narrows the wage gap between high and low skilled workers and analysis of such opposite conclusions is also stated in this essay. For the channel of product market competition, FDI and imports caused by it squeeze the proportion of product sales of domestic-funded enterprises, reducing the level of domestic wages on the whole and while the wages of low-skilled workers dropping more, the wage gap between high and low-skilled workers are expanded. For the channel of labor supply and demand, the increase in FDI and trade expands the proportion of foreign-funded enterprises in their employment, especially for skilled labor, leading to the reduction of supply of high-tech labor in domestic enterprises; therefore the wage gap between high and low skilled workers is expanding within the region. Considering the lower quality of China’s export products, trade tends to demand for more low-skilled workers, so the wage level of low-skilled workers will increase, and the wage gap between high and low-skilled workers is narrowed. The seventh chapter elaborates conclusions, countermeasures and further research of this topic. Summarizing main conclusions of the essay and relevant countermeasures combining with the reality of the wage gap in China are put forward, as well as further research of this topic.The main innovation of this essay is that the research is carried out not only to analyze the effect of FDI and international trade on wage gap on the whole, but also the indirect effect of the product market, labor market and technology spillover theoretically and empirically, making the analysis more comprehensive and specific. In the empirical study, two chain reaction equations are established to study the transmission mechanism of the industry or regional technical elements on wage gap, and the conduction mechanism of opening-up elements on technology spillovers. This approach can better explain reality and solve practical problems. By studying both increasing margin of FDI product sales in industry and regional levels and dropping margin in the proportion of sales of products in domestic enterprises after squeezing, this essay discusses in industry and regional levels, by indirect effects of China’s product market, how international trade and FDI affect the wage gap between high and low skilled workers eventually. By study of changes in cross-term of the import and export, FDI and labor in regional and industry levels, the effect of changes in economic open labor are examined. This study is a useful complement to existing research and also valuable for the development of targeted policies. |
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