The impacts of market fragmentation on a developing economy: Evidence from China

Even after three decades of economic reform, China's factor markets are still largely fragmented. The central question of this dissertation is how the intertwining of foreign trade, heterogeneity in skill endowments and the export content of China's provinces and market fragmentation affects China's economic structure. In the first essay, using product-level data on exports from different provinces within China, we study the determinants of the skill content of exports from each province in China and show how variations in factor endowments across regions may provide an answer to empirical puzzles on the factor content of China's exports. The second essay investigates whether regional differences in relative price movements can be linked to provincial differences in productivity growth or other differences related to structural changes in China's economy. The last essay focuses on the impact of trade on both regional and wage inequality within China, when factor market fragmentation exists.