Effect Of RMB Exchange Rate Changes On Wage Inequality In China's Manufacturing Industry

With the intensification of competition in the international market and the deepening of economic globalization,the status and the role of the exchange rate in the international economic field becomes more and more important.The impact of the exchange rate on the economy has always been one of the topics most concerned by economists.Changes in exchange rates not only affect the investment and trade of a country,but may further affect wages,employment,and price levels,thereby affecting the overall welfare level of society.In the past two decades,China has experienced significant economic growth,and the world is amazed at the rise of China.China has also been named the "World Factory."With the deepening of the degree of trade liberalization,the level of per capita wages in China has been greatly improved,but at the same time,the per capita wage gap in different industries and different cities is also widening,and wage inequality has increased year by year.China's economic development is facing the challenge of rising wage inequality.This paper uses the Chinese Industrial Enterprise Database and the Chinese Customs Import and Export Database to conduct an empirical study on the impact of RMB exchange rate changes on manufacturing urban-industry wage inequality(average)over enterprises in China.The results of the study indicate that the action of export exchange rates and import exchange rates on the inequality of wages in cities and industries are different and the effect is reversed.The action of industry penetration rate-weighted real effective exchange rates of RMB and export exchange rates on wage inequality in cities and industries are different and the effect is same:The devaluation of the RMB exchange rate should be conducive to the improvement of wage inequality in China's cities and industries,and the appreciation of the exchange rate should have a negative impact on wage inequality in China's cities and industries;appreciation of the RMB exchange rate is beneficial to China's urban-industry wage inequality improvement,and the devaluation of the import exchange rate should have an adverse effect on the industry's wage inequality in China;the depreciation of the RMB's real effective exchange rate,which is weighted by the industry's penetration rate,should be conducive to the improvement of wage inequality in the urban-industry industry in China.The appreciation of the RMB's real effective exchange rate,which is weighted by the industry's penetration rate,should have an adverse effect on manufacturing urban-industry wage inequality in China.This article also carried out a series of expansion analysis.The results showed that the impact of RMB exchange rate changes on wage inequality in China's manufacturing industry varies according to different industry factor concentration,and industry concentration.The specific performance is:the industry which is the capital or technology-intensive one,or higher the degree of industry concentration,the stronger the influence of the RMB export exchange rate on rising wage inequality,while the productivity,industry concentration,and factor concentration affect RMB imports,which result in the effect of exchange rates on the wage inequality in cities and industries is not significant.