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To Find Relative Earnings Gains After the China Shock, Look Upstream and Outside Manufacturing

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We find that US workers outside manufacturing exhibit relative earnings increases after US trade liberalization with China. These relative gains cumulate over time as the beneficial effect of a workerâ s upstream exposureâ increased competition from China in input marketsâ more than offsets the detrimental impact of her own and downstream (customer) exposures. These relative gains are smaller for non-manufacturing workers with less ex ante firm tenure and lower initial earnings, and are absent among manufacturing workers due to a lack of upstream gains and stronger downstream losses.

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  • Justin R. Pierce & Peter K. Schott & Cristina J. Tello-Trillo, 2026. "To Find Relative Earnings Gains After the China Shock, Look Upstream and Outside Manufacturing," International Finance Discussion Papers 1431, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgif:102365
    DOI: 10.17016/IFDP.2026.1431
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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