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Labor Market Adjustment to Third Party Competition: Evidence from Mexico

Author

Listed:
  • Raymond Robertson

    (Texas A&M University)

  • Timothy J Halliday

    (University of Hawaii at MÄ noa)

  • Sindhu Vasireddy

    (University of Hawaii at MÄ noa)

Abstract

China’s exports reduce wages in importing countries, but few studies have looked at competition in third party markets. We examine labor market outcomes in Mexico's apparel and textile sectors associated with U.S. apparel and textile imports from China. Using the Bartik (1991) approach, we find that U.S. imports from China are associated with a reduction of wages and employment in Mexico’s textile and apparel sector. Our results suggest that the adjustment to falling labor demand had larger effects on employment, which is consistent with relatively small firm-level employment adjustment costs, and that low-wage workers are more tied to local markets.

Suggested Citation

  • Raymond Robertson & Timothy J Halliday & Sindhu Vasireddy, 2018. "Labor Market Adjustment to Third Party Competition: Evidence from Mexico," Working Papers 201801, University of Hawaii at Manoa, Department of Economics.
    • Handle: RePEc:hai:wpaper:201801
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    References listed on IDEAS

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    Cited by:

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    2. Óscar Rodil-Marzábal & Ana Laura Gómez Pérez & Hugo Campos-Romero, 2022. "The Global Textile and Apparel Value Chain: From Mexico–US–China Linkages to a Global Approach," Economies, MDPI, vol. 10(10), pages 1-18, October.
    3. Sandra Orozco-Aleman & Heriberto Gonzalez-Lozano, 2021. "Return Migration and Self-Employment: Evidence from Mexican Migrants," Journal of Labor Research, Springer, vol. 42(2), pages 148-183, June.

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    More about this item

    Keywords

    Apparel; China; Mexico; Trade; Wages; Inequality;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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