Using Chinese firm-level production data, this paper developed a Mincer (1974)-type approach to investigate the impact of input trade liberalization on firms' wage inequality between skilled and unskilled workers (or skill premium). When controlling for product-market tariffs in a firm's industry, we find robust evidence that reduced input tariffs in a firm's industry are associated with a higher skill premium at firms with more skilled workforces. This effect is more pronounced at ordinary (non-processing) firms. We also provide evidence that reduced input tariffs in a firm's industry are associated with higher value added and profits at firms with more skilled workforces.

Additional Metadata
Keywords Firm evidence, Input trade liberalization, Skill premium
Persistent URL dx.doi.org/10.1016/j.jinteco.2017.08.005
Journal Journal of International Economics
Citation
Chen, B. (Bo), Yu, M. (Miaojie), & Yu, Z. (2017). Measured skill premia and input trade liberalization: Evidence from Chinese firms. Journal of International Economics, 109, 31–42. doi:10.1016/j.jinteco.2017.08.005