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

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Author Info

  • Autor, David

    ()
    (MIT)

  • Dorn, David

    ()
    (CEMFI, Madrid)

  • Hanson, Gordon H.

    ()
    (University of California, San Diego)

Abstract

We analyze the effect of rising Chinese import competition between 1990 and 2007 on U.S. local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for U.S. 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 U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7150.

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Length: 67 pages
Date of creation: Jan 2013
Date of revision:
Publication status: published in: American Economic Review, 2013, 103 (6), 2121-68
Handle: RePEc:iza:izadps:dp7150

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Keywords: import competition; trade flows; local labor markets; China;

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