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

  • David H. Autor
  • David Dorn
  • Gordon H. Hanson

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

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 103 (2013)
Issue (Month): 6 (October)
Pages: 2121-68

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Handle: RePEc:aea:aecrev:v:103:y:2013:i:6:p:2121-68
Note: DOI: 10.1257/aer.103.6.2121
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