International Trade、Directed Technical Change And China’s Wage Inequality

In recent years, the economic globalization makes countries or regions more close.The sum of international trade of most countries or regions has been increasing, and withthe increase of international trade, wage inequality has been growing day by day whichhas attracted worldwide attention. Since the reform and opening up, China has alwaysinsisted on the export-oriented trade strategy, especially after joining the WTO, China isadjusting the trade policy actively with the significant decline in tariffs so that the tradesurplus is continuously increasing. It realizes the continuous high-speed growth in GDPdepending on the export. However, with the rapid growth of China’s international trade,the wage gap between the high-skilled workers and low-skilled workers has also showedincreasing continuously.Traditional international trade theory (namely Heckscher-Ohlin andStolper-Samuelson theory HOSS) showed that developing countries export low-skilledintensive products and import high-skilled intensive products after trade opening, whichmakes relative price of low-skilled intensive products rise, and with low-skilled laborrelative demand increasing, the wage gap is narrowing. However, the data of numerousdeveloping countries including China show that, along with the increase of the openingdegree of trade, wage inequality is not narrowing, but continues to increase. This isobviously inconsistent with the anticipation of HOSS theory. I will explain the impact ofinternational trade on the wage gap from the skill biased technical change (SBTC)perspective in this paper.This paper constructs the wage premium decision equation and confirms theinternational trade on the influence of the wage premium. Then we use1978-2010national time series data and1997-2010panel data in31provinces or cities respectively toexplore the impact of international trade, biased technical change on wage inequality inChina. Finally, both get the same conclusion which indicates that China’s internationaltrade makes technical change skill biased, and then the wage gap is increasing. This paperprovides a new perspective for the interpretation of the impact of international trade onwage inequality, and of course contributes to the understanding of the direction and sourceof China’s technical change.