The effect of outward processing trade on wage inequality : the Hong Kong case
Journal of International Economics
Wage inequality, Outward processing trade, Causality
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.
Copyright © 2004 Elsevier B.V.
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Accepted Author Manuscript
Ho, L. S., Wei, X., & Wong, W. C. G. (2005). The effect of outward processing trade on wage inequality: The Hong Kong case. Journal of International Economics, 67(1), 241-257. doi: 10.1016/j.jinteco.2004.09.005