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

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  • Wolfgang Dauth
  • Sebastian Findeisen
  • Jens Suedekum

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 493,000 additional jobs in the economy and contributed to retaining the manufacturing sector in Germany. We also conduct our 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 UBS International Center of Economics in Society - Department of Economics - University of Zurich in its series UBSCENTER - Working Papers with number 003.

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Date of creation: Aug 2013
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Handle: RePEc:zur:uceswp:003

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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 & Suedekum, Jens, 2014. "Globalization and Local Profiles of Economic Growth and Industrial Change," IZA Discussion Papers 8161, Institute for the Study of Labor (IZA).
  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, 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.
  4. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-88, Winter.

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