Working Paper: NBER ID: w24080
Authors: Brian J. Asquith; Sanjana Goswami; David Neumark; Antonio Rodriguez-Lopez
Abstract: International trade exposure affects job creation and destruction along the intensive margin (job flows due to expansions and contractions of firms' employment) as well as along the extensive margin (job flows due to births and deaths of firms). This paper uses 1992-2011 employment data from the {universe} of U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the `China shock' on each job-flow type. The China shock is accounted for by either the increase in Chinese import penetration in the U.S., or by the U.S. policy change that granted Permanent Normal Trade Relations (PNTR) status to China. We find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the nonexposed sector, and establish that the gross employment effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.
Keywords: China shock; job flows; employment; trade policy
JEL Codes: F14; F16; F6; J2; J65
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| china shock (F31) | deaths of establishments (L26) |
| deaths of establishments (L26) | job reallocation (J62) |
| china shock (F31) | job reallocation from exposed sector to non-exposed sector (J68) |
| Bartik shock (Y60) | net job creation (J23) |
| china shock (F31) | net job destruction (J63) |
| net job creation in non-exposed sector (J68) | overall net effect on employment (J68) |