Abstract: Based on the data of China's industrial firms and Customs from 2000 to 2013, this paper employs the instrumental variable approach to analyze the impact of tariff cuts on the employee wages of Chinese firms. The findings show that the tariff cuts on final finished goods will lower the employees' wages of the exporting firms, as the firms at the margin of export critical point may experience profit loss when shifting from the domestic markets to the international markets after the tariff cuts on the final finished goods, then leading to the fall of employee wages. The tariff cuts on intermediate input products will reduce the employees' wages of non-importing firms but raise the employees' wages of importing firms, since the importing firms may improve their operational performances with tariff cuts through the“cost-saving”effect and“variety”effect of the intermediate input products. For firms engaged in processing trade and general trade, the tariff cuts on final finished goods will all lower the employee's wages of processing export enterprises. However, the tariff cuts on intermediate input goods will have different impacts on the employee's wages, the employee's wages of the import enterprises engaged in processing trade will be lowered, while the employee's wages of the import enterprises engaged in ordinary trade will be raised. The results of the regional study indicate that the tariff cuts on the final finished goods will lower the employee's wages of the export enterprises located at the eastern and western regions but raise the employee's wages of the export enterprises located at the central region. However, the tariff cuts of intermediate input goods will raise the employee's wages of the import enterprises located at the eastern and western regions, but lower the employee's wages of import enterprises located in the central region.

Key words: trade liberalization, intermediate products trade, wage