Research On The Influence Of FDI On The Wage Gap Of China's Service Industries

Under the background of the division of global value chains and higher degree of industrial correlation,the extent of China's service sector opening to the outside world has gradually deepened and expanded.The introduction of foreign capital has become an important grasp on development of service industry.However,facing the critical period of economy transition to service country,the wage gap of service industry has widened a lot and become an increasingly appearance of income gap after urban-rural income gap and regional income gap,which has threatened the high-quality and healthy development of service industry.As an important source of capital to create value of service,foreign direct investment has inevitably effect on employment and technical progress and then becomes a main factor which affect the wage gap of service industry.The current literatures have proved the wage gap effect of FDI by using macro data from China or some regions,but few focus on the effect of FDI on the wage gap of service industry and the influencing mechanism.Taking the service industry as the research object,the paper discusses how FDI effect the wage gap of service industry and the effect under different investment motive and entry mode of FDI by using 24 provincial panel data from 2004 to 2016 of China from theory and experiment angles,which can enrich the research framework of income gapThe main conclusions in this paper have the follows points:Firstly,under the control of other influencing factors,FDI have significant effect in widening the wage gap in China's service industry as a whole.The main reason is that FDI will increase employment of medium-low tech industries but reduce the wage and make technical progress of medium-high tech industries to enlarge the industry wage gap.Secondly,when consider the heterogeneity of FDI,the vertical FDI will make the industry wage gap larger,while the horizontal FDI has no effect,FDI with the joint venture mode will make the industry wage gap larger,while FDI with the single-proprietorship mode has no effect.As a result,while making efforts to introduce FDI,the government should protect the benefit of medium-low tech industry group;increase investment in education to improve the digestibility of technology spillovers of medium-low tech industries;encourage and guide service FDI more from low-end value chain to high-end value chain to increase highly technical horizontal FDI;guide enterprises to establish independent research system to enhance our capacity for independent innovation,narrowing the wage gap of China's service industries in multiple dimensions.