The China Syndrome: Local Labor Market Effects of Import Competition in the United States

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 hig...

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Bibliographic Details
Published in:The American economic review 2013-10, Vol.103 (6), p.2121-2168
Main Authors: Autor, David H., Dorn, David, Hanson, Gordon H.
Format: Article
Language:English
Subjects:
China
Competition
Economic models
Economic theory
Economics
Employment
Employment statistics
Free trade
Import competition
Imports
Industrial market
International relations
International trade
Labor economics
Labor market
Labour market
Local labor markets
Low income groups
Manufacturing
Manufacturing industries
Outsourcing
Political economy
Population
Productivity
Social security
Specialization
Studies
Trade
Trade agreements
Trade liberalization
U.S.A
Unemployment
US exports
Wage differential
Wages
Wages & salaries
Workers' participation
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Summary: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 importcompeting 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.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.103.6.2121