The Impact of Trade Openness on the Gender Wage Gap in Urban China, 2002-2013

Abstract: This paper examines the impact of trade openness on the gender wage gap in urban China after China's accession to the WTO in 2001. Using data from the 2002 and 2013 China Household Income Project (CHIP), this paper uses OLS regression and instrumental variable regression, to analyze the relationship between trade openness and the gender wage gap. The findings are consistent with the neoclassical theory, as the results indicate that trade openness has a positive effect in reducing the gender wage gap in urban China. Moreover, this positive effect tends to slightly increase between 2002 and 2013. Specifically, trade openness is most beneficial in reducing the gender wage gap for low-income level and low-skill level groups. The reliability of these findings is further confirmed by heterogeneity tests and robustness tests. Lastly, based on the empirical results, the paper proposes three types of policy implications.