Tariff reductions and labor demand elasticities : evidence from Chinese firm-level data
International production fragmentation has been a global trend for decades, becoming especially important in Asia where the manufacturing process is fragmented into stages and dispersed around the region. This paper examines the effects of input and output tariff reductions on labor demand elasticities at the firm level. For this purpose, we consider a simple heterogenous firm model in which firms are allowed to export their products and to use imported intermediate inputs. The model predicts that only productive firms can use imported intermediate inputs (outsourcing) and tend to have larger constant-output labor demand elasticities. Input tariff reductions would lower the factor shares of labor for these productive firms and raise conditional labor demand elasticities further. We test these empirical predictions, constructing Chinese firm-level panel data over the 2000--2006 period. Controlling for potential tariff endogeneity by instruments, our empirical studies generally support these predictions.
|Date of creation:||Mar 2014|
|Date of revision:|
|Publication status:||Published in IDE Discussion Paper. No. 463. 2014.3|
|Contact details of provider:|| Postal: 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545|
Web page: http://www.ide.go.jp/
More information through EDIRC
|Order Information:|| Postal: Publication Office, IDE 3-2-2 Wakaba, Mihama-ku, Chiba-shi, Chiba 261-8545 JAPAN|
Web: http://www.ide.go.jp/English/Publish/Order Email:
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Petia Topalova & Amit Khandelwal, 2011.
"Trade Liberalization and Firm Productivity: The Case of India,"
The Review of Economics and Statistics,
MIT Press, vol. 93(3), pages 995-1009, August.
- Petia Topalova, 2004. "Trade Liberalization and Firm Productivity; The Case of India," IMF Working Papers 04/28, International Monetary Fund.
- Hiroyuki Kasahara & Beverly Lapham, 2008.
"Productivity and the Decision to Import and Export: Theory and Evidence,"
CESifo Working Paper Series
2240, CESifo Group Munich.
- Kasahara, Hiroyuki & Lapham, Beverly, 2013. "Productivity and the decision to import and export: Theory and evidence," Journal of International Economics, Elsevier, vol. 89(2), pages 297-316.
- Senses, Mine Zeynep, 2010. "The effects of offshoring on the elasticity of labor demand," Journal of International Economics, Elsevier, vol. 81(1), pages 89-98, May.
- Giorgio Barba Navaretti & Daniele Checchi & Alessandro Turrini, 2003.
"Adjusting Labor Demand: Multinational Versus National Firms: A Cross-European Analysis,"
Journal of the European Economic Association,
MIT Press, vol. 1(2-3), pages 708-719, 04/05.
- Barba Navaretti, Giorgio & Checchi, Daniele & Turrini, Alessandro Antonio, 2003. "Adjusting Labour Demand: Multinational versus National Firms- A Cross-European Analysis," CEPR Discussion Papers 3751, C.E.P.R. Discussion Papers.
- Krishna, Pravin & Mitra, Devashish & Chinoy, Sajjid, 2001. "Trade liberalization and labor demand elasticities: evidence from Turkey," Journal of International Economics, Elsevier, vol. 55(2), pages 391-409, December.
- Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 907-940.
- Loren Brandt & Johannes Van Biesebroeck & Yifan Zhang, 2009.
"Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing,"
NBER Working Papers
15152, National Bureau of Economic Research, Inc.
- Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
- Daniel Chiquiar, 2004.
"Globalization, Regional Wage Differentials and the Stolper-Samuelson Theorem: Evidence from México,"
2004-06, Banco de México.
- Chiquiar, Daniel, 2008. "Globalization, regional wage differentials and the Stolper-Samuelson Theorem: Evidence from Mexico," Journal of International Economics, Elsevier, vol. 74(1), pages 70-93, January.
- Dani Rodrik, 1997. "Has Globalization Gone Too Far?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 57, January.
- Slaughter, Matthew J., 2001. "International trade and labor-demand elasticities," Journal of International Economics, Elsevier, vol. 54(1), pages 27-56, June.
When requesting a correction, please mention this item's handle: RePEc:jet:dpaper:dpaper463. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marie Kobayashi)
If references are entirely missing, you can add them using this form.