Working Paper: NBER ID: w29196
Authors: Philippe Aghion; Antonin Bergeaud; Matthieu Lequien; Marc Melitz; Thomas Zuber
Abstract: We decompose the “China shock” into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm-level, we show that the output shock is detrimental to firms’ sales, employment and innovation. Moreover, this negative impact is concentrated on low-productivity firms. By contrast, we find a positive effect - although often not significant - of the input supply shock on firms’ sales, employment and innovation.
Keywords: China shock; firm-level analysis; output shock; input supply shock; French manufacturing
JEL Codes: F14; F16; F60; O31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| output shock (E23) | firms' sales (L25) |
| output shock (E23) | firms' employment (M51) |
| output shock (E23) | firms' innovation (O31) |
| input supply shock (F41) | firms' sales (L25) |
| input supply shock (F41) | firms' employment (M51) |
| input supply shock (F41) | firms' innovation (O31) |
| output shock + input supply shock (F41) | firms' employment (M51) |
| output shock (E23) | patenting activities (O34) |