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Trade Shocks and Firms Hiring Decisions: Evidence from Vacancy Postings of Chinese Firms in the Trade War

Author

Listed:
  • He, Chuan
  • Mau, Karsten
  • Xu, Mingzhi

Abstract

This paper studies adjustments in labor demand of firms exposed to the recent China-US trade war. Our analysis leverages information from a Chinese online job board and a firm-level measure of tariff exposure obtained from customs transactions data. Firms that are more exposed to US tariffs on Chinese goods responded by posting fewer job vacancies and offering lower wages. The latter is partly balanced out by increased non-wage compensation. We also find a negative relationship between US-tariff exposure and the educational background required in firms’ job ads. China’s retaliatory tariffs against the US does not appear to have a statistically significant systematic impact on hiring. The paper also reports heterogeneous adjustment patterns across firms of different size, ownership and product mix. Overall, the trade war reveals to have negative impact on firms and job-seekers in China.

Suggested Citation

  • He, Chuan & Mau, Karsten & Xu, Mingzhi, 2021. "Trade Shocks and Firms Hiring Decisions: Evidence from Vacancy Postings of Chinese Firms in the Trade War," Labour Economics, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:labeco:v:71:y:2021:i:c:s0927537121000567
    DOI: 10.1016/j.labeco.2021.102021
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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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