IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/20054.html
   My bibliography  Save this paper

China's Impact on Regional Employment: Propagation through Supply Chains and Co-agglomeration Pattern

Author

Listed:
  • SAITO Yukiko
  • KAINUMA Shuhei
  • Michal FABINGER

Abstract

How does import from China affect local labor markets in Japan? We examine this question using commuting zones as regional units, incorporating shock propagation through supply chains, as well as co-agglomeration patterns. Applying the method proposed by Autor, Dorn and Hanson (2013) and Acemoglu, et al. (2016), we investigate the impact on regional manufacturing employment. Employing the input-output table allows us to analyse how the shocks propagate to upstream/downstream industries and how regional impact is related to co-agglomeration patterns. We find that the negative direct effect on local employment is underestimated in previous studies that do not consider regional propagation of the shock through supply chains, especially the positive shock to downstream industries. Downstream industries significantly benefit from imports from China due to low input prices, which increases local employment. We find no significant impact on upstream industries. Our results imply that the direct effect on local labor markets is weakened by effects on downstream industries within the same region.

Suggested Citation

  • SAITO Yukiko & KAINUMA Shuhei & Michal FABINGER, 2020. "China's Impact on Regional Employment: Propagation through Supply Chains and Co-agglomeration Pattern," Discussion papers 20054, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:20054
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/20e054.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Autor & David Dorn & Gordon Hanson & Kaveh Majlesi, 2020. "Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure," American Economic Review, American Economic Association, vol. 110(10), pages 3139-3183, October.
    2. Nicholas Bloom & Mirko Draca & John Van Reenen, 2016. "Trade Induced Technical Change? The Impact of Chinese Imports on Innovation, IT and Productivity," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(1), pages 87-117.
    3. David H. Autor & David Dorn & Gordon H. Hanson, 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," American Economic Review, American Economic Association, vol. 103(6), pages 2121-2168, October.
    4. Pol Antras & Davin Chor & Thibault Fally & Russell Hillberry, 2012. "Measuring the Upstreamness of Production and Trade Flows," American Economic Review, American Economic Association, vol. 102(3), pages 412-416, May.
    5. Wolfgang Dauth & Sebastian Findeisen & Jens Suedekum, 2014. "The Rise Of The East And The Far East: German Labor Markets And Trade Integration," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1643-1675, December.
    6. Daron Acemoglu & Ufuk Akcigit & William Kerr, 2016. "Networks and the Macroeconomy: An Empirical Exploration," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 273-335.
    7. Balsvik, Ragnhild & Jensen, Sissel & Salvanes, Kjell G., 2015. "Made in China, sold in Norway: Local labor market effects of an import shock," Journal of Public Economics, Elsevier, vol. 127(C), pages 137-144.
    8. Pol Antràs & Teresa C. Fort & Felix Tintelnot, 2017. "The Margins of Global Sourcing: Theory and Evidence from US Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2514-2564, September.
    9. Justin R. Pierce & Peter K. Schott, 2016. "The Surprisingly Swift Decline of US Manufacturing Employment," American Economic Review, American Economic Association, vol. 106(7), pages 1632-1662, July.
    10. Tolbert, Charles M. & Sizer, Molly, 1996. "U.S. Commuting Zones and Labor Market Areas: A 1990 Update," Staff Reports 278812, United States Department of Agriculture, Economic Research Service.
    11. Zhi Wang & Shang-Jin Wei & Xinding Yu & Kunfu Zhu, 2018. "Re-examining the Effects of Trading with China on Local Labor Markets: A Supply Chain Perspective," NBER Working Papers 24886, National Bureau of Economic Research, Inc.
    12. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    13. Taniguchi, Mina, 2019. "The effect of an increase in imports from China on local labor markets in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 1-18.
    14. Nobuaki Yamashita & Isamu Yamauchi, 2020. "Innovation responses of Japanese firms to Chinese import competition," The World Economy, Wiley Blackwell, vol. 43(1), pages 60-80, January.
    15. Clément Malgouyres, 2017. "The Impact Of Chinese Import Competition On The Local Structure Of Employment And Wages: Evidence From France," Journal of Regional Science, Wiley Blackwell, vol. 57(3), pages 411-441, June.
    16. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    17. ADACHI Daisuke & FUKAI Taiyo & KAWAGUCHI Daiji & SAITO Yukiko, 2020. "Commuting Zones in Japan," Discussion papers 20021, Research Institute of Economy, Trade and Industry (RIETI).
    18. Vicente Donoso & V�ctor Mart�n & Asier Minondo, 2015. "Do Differences in the Exposure to Chinese Imports Lead to Differences in Local Labour Market Outcomes? An Analysis for Spanish Provinces," Regional Studies, Taylor & Francis Journals, vol. 49(10), pages 1746-1764, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shuhei Kainuma & Yukiko U. Saito, 2022. "China's impact on regional employment: Propagation through input–output linkages and co‐location patterns," The World Economy, Wiley Blackwell, vol. 45(11), pages 3559-3601, November.
    2. Zhi, Yan & Bao, Di & Luo, Changyuan, 2019. "The China effect: Evidence from data at firm level in Thailand," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    3. Stephen J. Redding, 2020. "Trade and Geography," NBER Working Papers 27821, National Bureau of Economic Research, Inc.
    4. Flora Bellone & Cilem Selin Hazir & Toshiyuki Matsuura, 2022. "Adjusting to China competition: Evidence from Japanese plant‐product‐level data," Review of International Economics, Wiley Blackwell, vol. 30(3), pages 732-763, August.
    5. 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.
    6. Kagitani, Koichi & Harimaya, Kozo, 2020. "Does international trade competition influence candidates and voters? The case of Japanese Lower House elections," Journal of the Japanese and International Economies, Elsevier, vol. 57(C).
    7. Sónia Cabral & Pedro S. Martins & João Pereira dos Santos & Mariana Tavares, 2021. "Collateral Damage? Labour Market Effects of Competing with China—at Home and Abroad," Economica, London School of Economics and Political Science, vol. 88(350), pages 570-600, April.
    8. Chad Brown & Paola Conconi & Aksel Erbahar & Lorenzo Trimarchi, 2020. "Trade Protection Along Supply Chains," Working Papers ECARES 2020-52, ULB -- Universite Libre de Bruxelles.
    9. Toshiyuki Matsuura, 2022. "Heterogeneous impact of import competition on firm organisation: Evidence from Japanese firm‐level data," The World Economy, Wiley Blackwell, vol. 45(7), pages 2251-2269, July.
    10. Lee Branstetter & Ana Venancio & Brian Kovak, 2019. "The China Shock and Portuguese Manufacturing," 2019 Meeting Papers 1051, Society for Economic Dynamics.
    11. Adam Jakubik & Victor Stolzenburg, 2021. "The ‘China Shock’ revisited: insights from value added trade flows," Journal of Economic Geography, Oxford University Press, vol. 21(1), pages 67-95.
    12. Christian Dippel & Robert Gold & Stephan Heblich & Rodrigo Pinto, 2017. "Instrumental Variables and Causal Mechanisms: Unpacking the Effect of Trade on Workers and Voters," CESifo Working Paper Series 6816, CESifo.
    13. Erling Barth & Henning Finseraas & Anders Kjelsrud & Kalle Moene, 2023. "Hit by the Silk Road: how wage coordination in Europe mitigates the China shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 32-72, January.
    14. MATSUURA Toshiyuki, 2019. "Heterogeneous Impact of Import Competition on Firm Organization: Evidence from Japanese firm-level data," Discussion papers 19086, Research Institute of Economy, Trade and Industry (RIETI).
    15. Goya, Daniel, 2021. "The network effect of Chinese competition on what domestic suppliers produce," Economic Modelling, Elsevier, vol. 102(C).
    16. Philippe Aghion & Antonin Bergeaud & Matthieu Lequien & Marc J. Melitz & Thomas Zuber, 2022. "Opposing firm-level responses to the China shock: output competition versus input supply," POID Working Papers 047, Centre for Economic Performance, LSE.
    17. Daniel Lind, 2022. "The China Effect on Manufacturing Productivity in the United States and Other High-income Countries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 42, pages 33-62, Spring.
    18. Taniguchi, Mina, 2019. "The effect of an increase in imports from China on local labor markets in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 1-18.
    19. Magli, Martina, 2022. "The Spillover Effect of Services Offshoring on Local Labour Markets," Rationality and Competition Discussion Paper Series 351, CRC TRR 190 Rationality and Competition.
    20. Hayakawa, Kazunobu & Ito, Tadashi & Urata, Shujiro, 2021. "Impacts of increased Chinese imports on Japan’s labor market," Japan and the World Economy, Elsevier, vol. 59(C).

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:dpaper:20054. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: TANIMOTO, Toko (email available below). General contact details of provider: https://edirc.repec.org/data/rietijp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.