Exports and the demand for skilled labor in China: Do foreign ownership and trade type matter?

Exporters demand relatively high-quality labor to confront fierce competition in the international markets. The extant literature documents the fact that exporters generally require more skilled workers than non-exporters. However, whether this pattern prevails in China has not yet been well-explored. This study examines the relationship between exports and the demand for skilled labor in China, with a focus on the role of foreign ownership and export type. Using a nationally representative firm-level dataset for 2002–2004, our results indicate that exporters utilize a lower share of skilled labor than non-exporters in contrast to the existing evidence. This finding holds for both foreign-invested enterprises and domestic firms, while it applies only to processing exporters. Similar results were obtained using matched samples using the propensity score matching technique. These results suggest that the main mechanism underlying the link between exports and skilled labor demand is China's exploitation of their comparative advantage in unskilled labor-intensive production.