The Impact Of Trade Liberalization On Relative Wages

Since the reform and opening up, with the deepening of trade liberalization process, our country economy and foreign trade have achieved rapid development, china has become the world's third-biggest economy. as the "world factory"our country's manufacturing has played a more and more important role in the economic growth. However,with the rapid development of the whole industry,the income distribution gap between manufacturing become bigger and bigger, so whether the trade liberalization and income distribution between industry related? If it is, be positive or negative? And how is trade liberalization influence employee wages? In view of this, this article studied the relation of trade liberalization to relative wages between manufacturing.First,this paper introduced the theory and the mechanism about trade and factors return,then analyzed the applicability of S-S theorem in China.then we introduced the development of trade and income inequality of manufacturing in detail. In the framework of trade and income inequality,This paper using China 27 manufacturing subdivision industry panel data from 1998 to 2008, The research found that trade really extend the income inequality of Chinese manufacturing.The empirical results indicated that trade and industry relative wages are positive related, however exports and imports have opposite effect.Exports have inhibition to industry relative wages,but not significantly.While imports significantly improve the relative wages.factor-intensity's role is not significant.Our country is a manufacturing power where cheap labour is rich.Most of exports are labor-intensive products,while capital-intensive products are mostly imported.this means labor-intensive industries relatively wages lower, capital-intensive industries relatively wages higher.with the high speed development of trade,export and import industries both have increased wages,but the trade really has extend the income inequality of Chinese manufacturing,Finally,according to the empirical results and the present situation of manufacturing,we give a series of policy suggestion.Upgrade trade structure and industry structure, make a good use of FDI,prompt technical progress and technology innovation,establish private brand.Improve the quality of workers,especially the people who are in labour-intensive industries,Eliminate the incentive which lead to income inequality of manufacturing fundamentally.