Abstract
This study uses time series analysis to investigate the impact of Hong Kong's increased outward processing trade with the Chinese Mainland on wage inequality. We found a significant positive association between outward processing trade and the wage premium of university graduates over primary school graduates and that over secondary school graduates. Moreover, a standard test showed one-way causality from outward processing trade to the widening of skill wage gap. Furthermore, the increase of outward processing trade is found to both increase the pay for well-educated people and decrease the pay for less well-educated people, thereby widening the wage gap.
| Original language | English |
|---|---|
| Pages (from-to) | 241-257 |
| Number of pages | 17 |
| Journal | Journal of International Economics |
| Volume | 67 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Sept 2005 |
Funding
We thank Jonathan Eaton and an anonymous referee for their valuable comments. We are responsible for any remaining errors.
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 1 No Poverty -
SDG 8 Decent Work and Economic Growth -
SDG 10 Reduced Inequalities
Keywords
- Causality
- Outward processing trade
- Wage inequality
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