Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261483 
Year of Publication: 
2022
Series/Report no.: 
BOFIT Discussion Papers No. 6/2022
Publisher: 
Bank of Finland, Bank of Finland Institute for Emerging Economies (BOFIT), Helsinki
Abstract: 
In China, the relative wages of high-skilled and low-skilled workers display huge variation across different regions. We examine whether financial intermediation development can explain such variation. Conceptually, better-developed financial intermediation helps financially-constrained firms raise new capital, which is usually skilledbiased, resulting in an increased demand for skilled labor and skill premium. Using a cross-section of workers from the 1% Population Survey of 2005, we find consistent evidence; besides, the relationship is stronger among workers in industries with higher capital-skill complementarity and in non-state-owned enterprises. Overall, our results suggest that the financial market plays a role in explaining skill premium in China.
Subjects: 
Financial intermediation
Misallocation
Skill premium
China
JEL: 
J24
J31
O11
Persistent Identifier of the first edition: 
ISBN: 
978-952-323-413-0
Document Type: 
Working Paper

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