Working Paper: CEPR ID: DP18018
Authors: Aitor Irastorza Fadrique; Peter Levell; Matthias Parey
Abstract: We use large-scale panel data from linked decadal censuses in England and Wales to study the responses of both individuals and their partners to rising Chinese import competition in the 2000s. We test whether partners provide insurance against lost household earnings by increasing labour supply. We find that both own and partner responses to the shock vary significantly by gender. Men in households exposed to import competition respond by increasing labour force participation at older ages, and by moving into solo self-employment. This is true both in response to their own trade exposure, and as an 'added worker effect' when their partner is exposed to the shock. By contrast, we find no such response for women, who do not increase labour supply if their male partners were initially employed in exposed industries. In general, self-employment appears to act as an employment buffer for men but not women. The impacts of import competition on partnering and family dissolution also differ according to the gender of those affected: for women below 45, but not men, exposure to the trade shock reduces the likelihood of divorce and of living with a new partner. Overall, our findings underscore the importance of investigating household responses, and the self-employment margin, to fully understand the effects of trade shocks.
Keywords: families
JEL Codes: D10; F14; F16; F61; J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased import competition from China (F69) | Labor market outcomes (J48) |
| Exposure to rising Chinese import competition (F69) | Increased labor force participation for men in exposed households (J49) |
| Male partners' exposure to import competition (J79) | Increased labor force participation for men through solo self-employment (J49) |
| Male partners' exposure to import competition (J79) | Added worker effect for men (J29) |
| Male partners' exposure to import competition (J79) | No significant increase in labor supply for women (J29) |
| Exposure to import competition (F14) | Reduced likelihood of divorce for women under 45 (J12) |
| Exposure to import competition (F14) | Reliance on current partners for women under 45 (J12) |