Trade liberalisation and labour shares in China

We estimate the extent to which firms responded to tariff reductions associated with China's WTO entry by altering labour's share of value. Firm‐level regressions indicate that firms in industries subject to tariff cuts raised labour's share relative to economy‐wide trends, both throu...

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Bibliographic Details
Published inWorld economy Vol. 42; no. 12; pp. 3588 - 3618
Main Authors Kamal, Fariha, Lovely, Mary E., Mitra, Devashish
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.12.2019
Subjects
China
Companies
Economic analysis
Free trade
labour shares
Ownership
Tariffs
trade liberalisation
Trade liberalization
Trends
China
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Summary:We estimate the extent to which firms responded to tariff reductions associated with China's WTO entry by altering labour's share of value. Firm‐level regressions indicate that firms in industries subject to tariff cuts raised labour's share relative to economy‐wide trends, both through input choices and rent sharing. Our estimates suggest that, on average, an industry that experienced no reductions in output or input tariffs would have a 15.7% lower labour share of value in 2007 than it actually did, assuming the same economy‐wide trends. There is significant variation across firms: the impact attenuates with geographic remoteness and union presence and strengthens with foreign ownership.
ISSN:0378-5920
1467-9701
DOI:10.1111/twec.12857