Trade in intermediates, technology spillovers, and wage inequality in Chinese manufacturing

The paper empirically analyzes the impact of technology spillovers of trade in intermediates on wage inequality in China using data for a panel of 28 manufacturing industries over the 1997-2009 period. The results show that, the foreign R&D capital embodied in intermediates could be more complementary with skilled labour than unskilled labour, knowledge learning and imitation are biased in favor of skilled labor, so that the foreign technology spillover of trade in intermediates is associated with an increase in skill demand and a trend of rising in the skilled-unskilled wage inequality in Chinese manufacturing.