Annual Review of Economics· 2016Q1· Review
The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade
- 1,279citations
- Q1SCImago
- 2016year
Short summary
Local labor markets exposed to China's trade shock saw wages and participation rates depressed and unemployment elevated for at least a decade, with exposed workers experiencing greater job churning and reduced lifetime income.
AI-generated from the title and abstract; the full text is not read.
Key points
- Labor markets exposed to the China trade shock showed slow adjustment, with depressed wages and participation, and elevated unemployment for over a decade.
- Workers in exposed industries experienced higher job turnover and reduced lifetime income.
- National-level employment gains in other sectors have not materialized to offset losses in import-competing industries.
- The benefits of trade are accompanied by substantial adjustment costs and distributional consequences, particularly in concentrated local labor markets.
AI-generated from the title and abstract; the full text is not read.
Abstract
China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in the US industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, is a key item on the research agenda for trade and labor economists.
The authors' abstract, as published at the source. Annual Review of Economics, 2016 · DOI ↗
Continue with a free account
Ask the paper: 3 free questions a day about this paper; save it, get its citation, new summaries every day for your field. Takeaways are Premium.
Continue free on the webSign in with Google or Apple; no card needed. You come back to this paper.
On your phone:
Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance