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Identifying Chinese supply shocks: Effects of trade on labor markets

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  • Andreas M. Fischer
  • Philipp Herkenhoff
  • Philip Sauré

Abstract

An influential literature estimates the impact of trade on labor markets with shift‐share instrumental variable designs under the assumption that common demand shocks in advanced economies are negligible. This article documents empirical patterns, which suggest that such common demand shocks are prevalent. It then proposes a strategy that directly identifies country‐specific export supply shocks. Finally, it uses these supply shocks in reduced‐form regression, which suggest contractions of manufacturing employment that are larger than those in the seminal contribution by Autor et al. (American Economic Review, 2013, 103, 2121–2168).

Suggested Citation

  • Andreas M. Fischer & Philipp Herkenhoff & Philip Sauré, 2023. "Identifying Chinese supply shocks: Effects of trade on labor markets," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1476-1507, September.
    • Handle: RePEc:bla:reviec:v:31:y:2023:i:4:p:1476-1507
    DOI: 10.1111/roie.12673
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    2. Akira Sasahara, 2022. "The Empirics of the China Trade Shock: A Summary of Estimation Methods and A Literature Review," Keio-IES Discussion Paper Series 2022-008, Institute for Economics Studies, Keio University.
    3. Egger, Peter H. & Kaynak, Pinar & Zoller-Rydzek, Benedikt, 2020. "Indirect effects of trade shocks on Turkish local labor markets," Regional Science and Urban Economics, Elsevier, vol. 83(C).

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    • F10 - International Economics - - Trade - - - General

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