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The China Syndrome: Local Labor Market Effects of Import Competition in the United States

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  • Autor, David

    (MIT)

  • Dorn, David

    (University of Zurich)

  • Hanson, Gordon H.

    (Harvard University)

Abstract

We analyze the effect of rising Chinese import competition between 1990 and 2007 on U.S. local labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization and instrumenting for U.S. imports using changes in Chinese imports by other high-income countries. Rising imports cause higher unemployment, lower labor force participation, and reduced wages in local labor markets that house import-competing manufacturing industries. In our main specification, import competition explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.

Suggested Citation

  • Autor, David & Dorn, David & Hanson, Gordon H., 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States," IZA Discussion Papers 7150, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7150
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    More about this item

    Keywords

    import competition; trade flows; local labor markets; China;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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