The China Syndrome: Local Labor Market Effects of Import Competition in the United States
David H. Autor, David Dorn, Gordon H. Hanson
American Economic Review · 2013 · Volume 103 · Issue 6
Abstract
We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross- market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.
Keywords
Employment, Unemployment, Wages, Intergenerational Income Distribution, Aggregate Human Capital, Empirical Studies of Trade, Trade and Labor Market Interactions, Industry Studies: Manufacturing: General, Measurement of Economic Growth, Aggregate Productivity, Cross-Country Output Convergence, Size and Spatial Distributions of Regional Economic Activity, Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration, Regional Labor Markets, Population, Neighborhood Characteristics
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