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Trade with China and Skill Upgrading: Evidence from Belgian Firm Level Data

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Author Info
Giordano Mion
Hylke Vandenbussche
Linke Zhu

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Abstract

We use Belgian ?rm level data over the period 1996-2006 to analyze the impact of imports from China and other low wage countries on ?rm growth, death, and skill upgrading. We distinguish the impact of imports into two di¡èerent channels: industry-level import competition and ?rm-level outsourcing. We ?nd that imports from China are much more important than imports from other low-wage countries. Industry-level import competition from China reduced ?rm employment and induced skill upgrading. Import competition from China alone can explain around 30 percent of the total skill upgrading in Belgian manufacturing during 1996- 2006. Our IV results con?rm the ambiguous role of outsourcing in ?rm employment growth, but we also ?nd that outsourcing to China will increase the relative employment of non-production workers and is bene?cial for ?rm survival.

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Publisher Info
Paper provided by LICOS - Centre for Institutions and Economic Performance, K.U.Leuven in its series LICOS Discussion Papers with number 24809.

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Date of creation: 2009
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Handle: RePEc:lic:licosd:24809

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Related research
Keywords: import competition; outsourcing; China; skill upgrading;

Find related papers by JEL classification:
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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  1. Head, Keith & Ries, John, 2002. "Offshore production and skill upgrading by Japanese manufacturing firms," Journal of International Economics, Elsevier, vol. 58(1), pages 81-105, October. [Downloadable!] (restricted)
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    Other versions:
  3. Leamer, Edward E, 1996. "Wage Inequality from International Competition and Technological Change: Theory and Country Experience," American Economic Review, American Economic Association, vol. 86(2), pages 309-14, May. [Downloadable!] (restricted)
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  5. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Ekholm, Karolina & Midelfart, Karen Helene, 2005. "Relative wages and trade-induced changes in technology," European Economic Review, Elsevier, vol. 49(6), pages 1637-1663, August. [Downloadable!] (restricted)
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  7. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
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  12. Eric A. Verhoogen, 2008. "Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector," The Quarterly Journal of Economics, MIT Press, vol. 123(2), pages 489-530, 05. [Downloadable!] (restricted)
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  13. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Blackwell Publishing, vol. 70(2), pages 199-230, 04. [Downloadable!] (restricted)
    Other versions:
  14. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-1), pages 327-377. [Downloadable!]
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  16. Robert E. Baldwin & Glen G. Cain, 2000. "Shifts In Relative U.S. Wages: The Role Of Trade, Technology, And Factor Endowments," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 580-595, November. [Downloadable!] (restricted)
  17. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May. [Downloadable!] (restricted)
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  19. Falk, Martin & Koebel, Bertrand M, 2002. " Outsourcing, Imports and Labour Demand," Scandinavian Journal of Economics, Blackwell Publishing, vol. 104(4), pages 567-86, December. [Downloadable!] (restricted)
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