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The rise of the East and the Far East: German labor markets and trade integration

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  • Dauth, Wolfgang
  • Findeisen, Sebastian
  • Suedekum, Jens

Abstract

We analyze the effects of the unprecedented rise in trade between Germany and the East - China and Eastern Europe - in the period 1988 - 2008 on German local labor markets. Using detailed administrative data, we exploit the cross-regional variation in initial industry structures and use trade flows of other high-income countries as instruments for regional import and export exposure. We find that the rise of the East in the world economy caused substantial job losses in German regions specialized in import-competing industries, both in manufacturing and beyond. Regions specialized in export-oriented industries, however, experienced even stronger employment gains and lower unemployment. In the aggregate, we estimate that this trade integration has caused some 442,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. This is almost exclusively driven by the rise of Eastern Europe, not by China. We also conduct an analysis at the individual worker level, and find that trade had a stabilizing overall effect on employment relationships. --

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Bibliographic Info

Paper provided by Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE) in its series DICE Discussion Papers with number 127.

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Date of creation: 2013
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Handle: RePEc:zbw:dicedp:127

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Keywords: International Trade; Import Competition; Export Opportunities; Local Labor Markets; Employment; China; Eastern Europe; Germany;

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Citations

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Cited by:
  1. Dauth, Wolfgang, 2013. "The Magnitude and Causes of Job Polarization: A Local Labor Market Approach," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79858, Verein für Socialpolitik / German Economic Association.
  2. Jens Suedekum & Wolfgang Dauth, 2013. "Profiles of local growth and industrial change: Facts and an explanation," ERSA conference papers ersa13p247, European Regional Science Association.
  3. Dauth, Wolfgang & Suedekum, Jens, 2014. "Globalization and local profiles of economic growth and industrial change," DICE Discussion Papers 142, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  4. Christian Dustmann & Bernd Fitzenberger & Uta Schönberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," CReAM Discussion Paper Series 1406, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.

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