Real wages and wage inequality in China, 1860--1936

What happens to real wages and wage inequality when a country opens to trade and begins to industrialize? China in the late nineteenth and early twentieth centuries provides an excellent case to explore this issue. However, studies on real wages and standards of living for China are scanty. This dissertation compiles the first systematic evidence on long-run patterns in real wages and living costs.;In this dissertation I first construct a set of cost of living indices for different income groups in China over the period from 1867 to 1936. I collect price data from the trade statistics published by the China Maritime Customs service (hereafter "CMC") and use the CMC's family budget surveys to estimate the consumption weights of sample commodities.;I then construct nominal wage series from the CMC's employment records for nearly fifty Chinese cities during that period. With these new nominal wage series and cost of living indices, I estimate the long-run trends in real wages and in the ratios of wages for skilled to unskilled workers and for highly skilled to unskilled workers.;I find that skill premia rose rapidly during the first three decades of industrialization. After the 1920s, the wage gap between skilled and unskilled labor began to decline, while the gap between highly skilled and unskilled labor continued to rise.;I find evidence suggesting that technological advances initially increased the demand for skilled and highly skilled labor, driving up the skill premium. The reversal of the skill premium is possibly driven by two factors. First, the trade boom in China during the early twentieth century benefited unskilled workers relative to skilled. Second, educational progress increased the supply of skilled workers, thereby reducing the skilled wage.