| Since China’s reform and opening up,China has made considerable progress in economic development. However, the rapid economic growth is accompanied by a growing wage gap. Industry is the main body of China’s economy and employment. Therefore,a more in depth, comprehensive study of the wage gap in the industrial sector is of great theoretical value and practical significance.The classic theory of the wage gap mainly explained the wage gap from the point of globalization and technological progress. The classic theory assumes that the market is perfectly competitive. However, factor market reform in China is seriously lagging behind. The markets of capital and land have serious distortions. Using the industrial data of China from2003to2010, this paper empirically analysis the effects of the price distortions for both capital and labor force, economic opening and technological progress on the wage gap. This study finds the following results. Technological progress and international trade play a significant role in narrowing the wage gap of the industrial sector. However, FDI play a significant role in widening the wage gap.Since the substantial enlargement of college enrollment in1998, there are more and more highly skilled workers in China. The oversupply of highly skilled workers has narrowed the wage gap in the industrial sectors. China’s capital market has a serious distortion, the distortion in the capital market expands the wage gap in industrial sector.This paper argues that China should encourage technological innovation and a higher level of technical progress, and make more efforts in vocational education to help migrant workers convert to skilled workers. These methods can optimize the structure of human capital in China, and help workers adapt to the adjustment of industrial structure. In addition, speeding up the reforms of the capital market also can play an important role in narrowing the wage gap in industrial sector. |
PDF Full Text Request