American Economic Review· 2013Q1
The China Syndrome: Local Labor Market Effects of Import Competition in the United States
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Short summary
Rising Chinese import competition between 1990 and 2007 significantly harmed US local labor markets, leading to higher unemployment, lower labor force participation, and reduced wages in areas with import-competing manufacturing.
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Key points
- Chinese import competition increased unemployment and reduced wages in US local labor markets.
- Import competition explains 25% of the aggregate decline in US manufacturing employment from 1990-2007.
- Trade-exposed labor markets saw significant increases in unemployment, disability, retirement, and healthcare benefit payments.
AI-generated from the title and abstract; the full text is not read.
Abstract
We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets. (JEL E24, F14, F16, J23, J31, L60, O47, R12, R23)
The authors' abstract, as published at the source. American Economic Review, 2013 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance