Skill-biased technological change and labor market polarization in China

This paper analyzes the formation mechanism of polarization in China's labor market from the perspective of skill-biased technological change (SBTC). Using the World Input-Output Database for 1995-2009 and China's industry database for 2010-2016, this paper measures the SBTC of 33 industries in China and conducts empirical tests. Results show that SBTC significantly promotes growth in employment and wages among both high-skilled and low-skilled workers but has no significant impact on the employment and wages of medium-skilled workers. A further analysis by using quantile regression shows that SBTC inhibits employment and wage growth among medium-skilled workers to some extent. These results indicate that SBTC is a crucial source of employment and wage polarization and contributes to labor market polarization in China.