Abstract Based on the inter-regional input-output tables of 30 provinces (municipalities and autonomous regions) of China in 2002, 2007, 2010 and 2012, this paper studies the impact and mechanism of domestic value chain embeddedness on skilled-unskilled wage gap. The results show that the embeddedness of domestic value chain has a significant negative impact on the skilled-unskilled wage gap, that is, the embedding of domestic value chain reduces the skilled-unskilled wage gap of workers. After introducing the instrumental communication tool variables of provincial and regional officials from different places to alleviate the endogenesis, the results are still robust. The mechanisms analysis indicates that the embedding of domestic value chain drives technology progress more toward unskilled labor-intensive sectors and hinders industrial structural upgrading, which leads to an increase in relative demand for low-skilled labor and wages.To a certain extent, it narrows the skills wage gap. Finally, after including the global value chain variables, it is found that the embedding of the domestic value chain weakens the widening effect of the skilled-unskilled wage gap caused by the embedding of the global value chain.The conclusions of this study have important policy implications for the reconstruction of domestic value chain and the realization of common prosperity in the context of regional economic integration.
2023, Vol. 40 
