Empirical Research On The Impact Of Globalization On Wage Inequality In China

Since the reform and opening-up, globalization has played a position role on utilizing of foreign investment, expanding exports, alleviating employment, and introducing advanced technology in China. Especially after being part of the World Trade Organization, China has accelerated the process of globalization in a high speed. However, globalization is acting like a "double-edged sword" for many countries which is an opportunity as well as a challenge. With the inflow of foreign capital, as well as in-depth development of foreign trade, the regional and industry wage inequality are also gradually increased in China, and this phenomenon growing seriously. The widening of wage inequality is against the current principle and policy of building a "socialist harmonious society" holds by the CPPCC.Based on this background, the paper study the role of globalization on China's regional and industry wage inequality from the perspective of status quo and empirical investment. At the regional wage gap level, this paper adopt the Coefficient of Variation and Theil index to measure the regional wage inequality in China, and decomposes this wage inequality to the inequality within-inland, within-coastal and between inland and coastal, and found that the inequality between inland and coastal has played an important role in the interpretation of total wage inequality. On the other hand, by analyzing the effect mechanism of globalization and migration on coastal-inland wage inequality and the non-linear effect of FDI on the wage gap, as well as building the export spillover variable. Finally, this paper presents the empirical model and carries out the empirical investigation. At the industry wage gap level, this paper empirical investigates the inter-industry wage inequality firstly, and then we establish the theoretical framework and empirical model of intra-industry wage inequality. Furthermore, this paper also accounts the impact of industry characteristics on the wage inequality, according to the monopoly and the factor intensity industries characteristics, we divided them into five sub-samples, and further study the effect of globalization on the different industry characteristics sub-samples.To sum up, for regional wage gap, the results suggest that there is an inverted-U pattern for the relationship between FDI and regional wage inequality. The export spillover between the provinces and cross-region migration of labor force widen the coastal-inland wage inequality. The input of education and technology change are also the important factors contributing to the regional wage inequality. When it comes to the industry side, the impaction of FDI on inter-industry wage inequality is inverted-U pattern, but there is un-stable U-type mechanism between FDI and intra-industry wage gap. Without taking into account the industry characteristics, import and export variables have a positive relationship on the inter-industry and intra-industry wage differentials. The role of industry profit on inter-industry and intra-industry wage differentials have different degrees of expansion, and the industry labor productivity could widen the wage gap between sectors, while the industry capital-output ratio can narrow the wage gap within the industry, and the industry characteristics will affect the role of FDI, import and export variables on the within-industry wage inequality. Finally, the paper makes corresponding policy recommendations according to the empirical results.