Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/196744 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12246
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We use Chinese firm-level data from the World Bank Investment Climate Survey to examine the link between importing intermediates and intra-firm wage inequality. Our results show that intermediate input importers not only have a significant wage premium but also have a greater intra-firm wage dispersion than non-importing firms. This pattern is robust when we control for productivity and use trade costs as the instruments. We further investigate the mechanism of how importing intermediates might contribute to both inter-firm and intra-firm wage inequality. Our evidence is consistent with three important channels. First, imported intermediate inputs complement skilled labour. Second, intermediates importers are more likely to use performance pay. Third, imported inputs complement innovation and employee training.
Subjects: 
global production sharing
wage inequality
world bank investment climate survey
JEL: 
F16
F63
F66
Document Type: 
Working Paper

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