Working Paper: NBER ID: w18054
Authors: David H. Autor; David Dorn; Gordon H. Hanson
Abstract: We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S. labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries. Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets. Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets.
Keywords: import competition; labor market; China; U.S. manufacturing
JEL Codes: F16; H53; J23; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Rising Chinese import exposure (F69) | U.S. labor market outcomes (J49) |
| 1,000 dollar increase in import exposure per worker (F66) | 0.75 percentage point decline in manufacturing employment per working-age population (F66) |
| 1,000 dollar import shock (F69) | 49% increase in unemployment (J68) |
| Rising import exposure (F69) | decrease in labor force participation (J21) |
| Rising import exposure (F69) | modest decline in non-manufacturing jobs (O14) |
| Rising import exposure (F69) | significant increase in non-participation in labor force (J22) |
| Increased exposure to low-income country imports (F69) | higher usage of public transfer benefits (H53) |
| Increased exposure to Chinese imports (F69) | persistent declines in employment and wages (J64) |
| Increased exposure to Chinese imports (F69) | importance of public transfer systems in mitigating impacts of trade-induced job losses (J68) |