Working Paper: NBER ID: w19226
Authors: David H. Autor; David Dorn; Gordon H. Hanson; Jae Song
Abstract: In the past two decades, China's manufacturing exports have grown spectacularly, U.S. imports from China have surged, but U.S. exports to China have increased only modestly. Using representative, longitudinal data on individual earnings by employer, we analyze the effect of exposure to import competition on earnings and employment of U.S. workers over 1992 through 2007. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings and are at elevated risk of exiting the labor force and obtaining public disability benefits. They spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, low attachment to the labor force, and those employed at large firms with low wage levels. Import competition also induces substantial job churning among high-wage workers, but they are better able than low-wage workers to move across employers with minimal earnings losses, and are less likely to leave their initial firm during a mass layoff. These findings, which are robust to a large set of worker, firm and industry controls, and various alternative measures of trade exposure, reveal that there are significant worker-level adjustment costs to import shocks, and that adjustment is highly uneven across workers according to their conditions of employment in the pre-shock period.
Keywords: Trade Adjustment; Import Competition; US Workers; Earnings; Employment
JEL Codes: F16; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| import competition from China (L40) | US worker outcomes (J89) |
| high subsequent import growth from China (F10) | lower cumulative earnings (J31) |
| high subsequent import growth from China (F10) | increased risk of exiting the labor force (J26) |
| high subsequent import growth from China (F10) | spend less time with initial employers (J29) |
| high subsequent import growth from China (F10) | more likely to receive public disability benefits (H55) |
| lower initial wages (J31) | greater earnings losses due to import competition (F66) |
| shorter tenure (J63) | greater earnings losses due to import competition (F66) |
| lower attachment to the labor force (J22) | greater earnings losses due to import competition (F66) |
| high-wage workers (J31) | minimal earnings losses despite job churning (J63) |