Title

The effect of outward processing trade on wage inequality : the Hong Kong case

Document Type

Journal article

Source Publication

Journal of International Economics

Publication Date

9-1-2005

Volume

67

Issue

1

First Page

241

Last Page

257

Keywords

Wage inequality, Outward processing trade, Causality

Abstract

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.

DOI

10.1016/j.jinteco.2004.09.005

Print ISSN

00221996

E-ISSN

18730353

Publisher Statement

Copyright © 2004 Elsevier B.V.

Access to external full text or publisher's version may require subscription.

Full-text Version

Accepted Author Manuscript

Recommended Citation

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