When the Floodgates Open: "Northern" Firms' Response to Removal of Trade Quotas on Chinese Goods

Using the dismantling of the Multi-fibre Arrangement quotas on Chinese textile products in conjunction with China's accession to the World Trade Organization (WTO), within firms adjustments to intensified low-wage competition is analyzed. Employing Danish employer-employee matched data covering...

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Bibliographic Details
Published in:American economic journal. Applied economics 2014-10, Vol.6 (4), p.226-250
Main Author: Utar, Hale
Format: Article
Language:English
Subjects:
Competition
Competitive advantage
Datasets
Economic competition
Economic theory
Economics
Education
Employees
Employment
Import competition
Imports
International
Logarithms
Manufacturing
Occupations
Productivity
Quotas
R&D
Research & development
Skills
Studies
Textile industry
Textiles
Trade restrictions
Wages
Wages & salaries
Work quotas
Workforce planning
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Summary:Using the dismantling of the Multi-fibre Arrangement quotas on Chinese textile products in conjunction with China's accession to the World Trade Organization (WTO), within firms adjustments to intensified low-wage competition is analyzed. Employing Danish employer-employee matched data covering from 1995 to 2007, the analysis shows a significant change in the workforce composition of firms in response to heightened competition. Competition is found to negatively affect employment, value-added, and intangible assets of the Danish firms, and firms refocus away from products, where China's competitive advantage becomes higher. The results show an important role of the distributional impact of low-wage competition within firms in restructuring the industry.
ISSN:1945-7782
1945-7790
DOI:10.1257/app.6.4.226