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Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad

Author

Listed:
  • Cabral, Sónia

    () (Banco de Portugal)

  • Martins, Pedro S.

    () (Queen Mary, University of London)

  • Pereira dos Santos, João

    () (Nova School of Business and Economics)

  • Tavares, Mariana

    () (Maastricht University)

Abstract

The increased range and quality of China's exports is a major ongoing development in the international economy with potentially far-reaching effects. In this paper, on top of the direct effects of increased imports from China studied in previous research, we also measure the indirect labour market effects stemming from increased export competition in third markets. Our findings, based on matched employer-employee data of Portugal covering the 1991-2008 period, indicate that workers' earnings and employment are significantly negatively affected by China's competition, but only through the indirect 'market-stealing' channel. In contrast to evidence for other countries, the direct effects of Chinese import competition are mostly non-significant. The results are robust to a number of checks and also highlight particular groups more affected by indirect competition, including women, older and less educated workers, and workers in domestic firms.

Suggested Citation

  • Cabral, Sónia & Martins, Pedro S. & Pereira dos Santos, João & Tavares, Mariana, 2018. "Collateral Damage? Labour Market Effects of Competing with China – at Home and Abroad," IZA Discussion Papers 11790, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11790
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    More about this item

    Keywords

    international trade; labour market; matched employer-employee data; China; import competition;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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