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Short‐ and long‐run labor market adjustment to import competition

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  • Juan Blyde
  • Matias Busso
  • Kyunglin Park
  • Dario Romero

Abstract

By exploiting spatial variation in import exposure arising from initial differences in industry specialization, we analyze how local labor markets in Mexico adjusted to increased Chinese‐import competition over different time horizons. The initial adjustment to the shock took various forms: a decline in the number of wage employees, a substitution of wage employees with piece‐rate or outsourced workers, and a substitution of formal employees with informal employees. The negative effects on employment were mainly associated with job destruction from exiting firms, particularly those that were small and medium‐sized. During periods in which employment fell, the population that actively participated in the labor force fell. The negative short‐ and medium‐run effects mostly disappeared after 20 years.

Suggested Citation

  • Juan Blyde & Matias Busso & Kyunglin Park & Dario Romero, 2023. "Short‐ and long‐run labor market adjustment to import competition," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1552-1569, September.
    • Handle: RePEc:bla:reviec:v:31:y:2023:i:4:p:1552-1569
    DOI: 10.1111/roie.12677
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    Cited by:

    1. Dix-Carneiro, Rafael & Kovak, Brian K., 2023. "Globalization and Inequality in Latin America," IZA Discussion Papers 16363, Institute of Labor Economics (IZA).
    2. Andrea Bernini & Olaf J. de Groot, 2024. "The impact of trade on income inequality in Mexico," Economics Series Working Papers 1036, University of Oxford, Department of Economics.

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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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