ABSTRACT
Combining a comprehensive household survey and an industrial firm survey, we investigate the impacts of import tariff reductions on urban income growth and distribution in China, after its entry into the World Trade Organization (WTO). Our identification strategy exploits the variation in the degree of tariff reductions across industries and the variation in the pre-WTO industry composition of local employment across Chinese cities. We find that those cities with larger tariff reductions after the WTO entry experienced lower income growth for manufacturing workers. Our estimation results suggest that such impacts occurred mainly through wage income and property income. We also find that the tariff reduction decreased income inequality in cities.
