We thank John Brown, Carolyn Evans, John Ifcher, Wolfgang Keller, Naomi Lamoreaux, Kevin O'Rourke, Larry Qiu, Alan Taylor, and Bin Xu as well as seminar and conference participants at UC Santa Cruz, Carlos III, IMT Lucca, and the ASSA and CNEH annual meetings for helpful comments and suggestions. Mitchener acknowledges the financial support of the Global Fellows Program, International Institute, UCLA and the Hoover Institution, Stanford University. Yan acknowledges the financial support of China National Social Science Foundation (Grant 09CJL009).
GLOBALIZATION, TRADE, AND WAGES: WHAT DOES HISTORY TELL US ABOUT CHINA?
Article first published online: 22 JAN 2014
© (2014) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
International Economic Review
Volume 55, Issue 1, pages 131–168, February 2014
How to Cite
MITCHENER, K. J. and YAN, S. (2014), GLOBALIZATION, TRADE, AND WAGES: WHAT DOES HISTORY TELL US ABOUT CHINA?. International Economic Review, 55: 131–168. doi: 10.1111/iere.12044
- Issue published online: 22 JAN 2014
- Article first published online: 22 JAN 2014
- Manuscript Revised: OCT 2012
- Manuscript Received: JUN 2011
- Global Fellows Program, International Institute, UCLA
- Hoover Institution, Stanford University
- China National Social Science Foundation. Grant Number: 09CJL009
Vol. 55, Issue 2, 601, Article first published online: 22 APR 2014
Newly assembled data show that, as China opened up to global trade during the early 20th century, its exports became more unskilled-intensive and its imports more skill-intensive. Difference-in-differences estimates show that World War I dramatically increased Chinese exports, raising the relative demand for the unskilled workers producing them. When the war ended, trade costs declined and China's terms of trade increased, further stimulating exports. A simulation of a dynamic general equilibrium model demonstrates that the effects of the war on China's terms of trade produces a decline in the skill premium similar to what China experienced in the 1920s.