IDEAS home Printed from https://ideas.repec.org/p/red/sed019/1433.html
   My bibliography  Save this paper

The Impact of Chinese Trade on U.S. Employment: The Good, The Bad, and The Apocryphal

Author

Listed:
  • Nicholas Bloom

    (Stanford University)

  • Andre Kurmann

    (Drexel University)

  • Kyle Handley

    (University of Michigan)

  • Philip Luck

    (University of Colorado Denver)

Abstract

Using establishment-level micro data from the U.S. Census Bureau, this paper studies the impact of Chinese import penetration on firm reorganization and relocation across local labor markets. We find three main results. First, the negative effect of Chinese import penetration on local manufacturing employment documented in the existing literature is driven primarily by large, importing firms that simultaneously expand employment in non-manufacturing. A third of this negative manufacturing effect is accounted for by establishments switching their reported industry affiliation to non-manufacturing. Second, the reorganization of firm activity occurs mainly away from production of machinery, electronics, and transportation equipment towards wholesale, professional services (including R&D), and management. Together, the results are indicative of a “Silicone Valley” story of offshoring according to which firms focus U.S. activities on research, design, and distribution but produce the actual goods abroad. Third, the reorganization of firm activity occurs unevenly across local labor markets. The negative employment effects in manufacturing are concentrated in areas with below human capital (mainly the South and Mid-West) whereas most of the positive employment effects in non-manufacturing occur in areas with above average human capital (mainly the West and East coasts). This suggests one reason why the China shock polarizes politics.

Suggested Citation

  • Nicholas Bloom & Andre Kurmann & Kyle Handley & Philip Luck, 2019. "The Impact of Chinese Trade on U.S. Employment: The Good, The Bad, and The Apocryphal," 2019 Meeting Papers 1433, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:1433
    as

    Download full text from publisher

    File URL: https://economicdynamics.org/meetpapers/2019/paper_1433.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Asquith, Brian & Goswami, Sanjana & Neumark, David & Rodriguez-Lopez, Antonio, 2019. "U.S. job flows and the China shock," Journal of International Economics, Elsevier, vol. 118(C), pages 123-137.
    2. 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.
    3. Kirill Borusyak & Peter Hull & Xavier Jaravel, 2018. "Quasi-Experimental Shift-Share Research Designs," Papers 1806.01221, arXiv.org, revised Aug 2020.
    4. Teresa C. Fort & Justin R. Pierce & Peter K. Schott, 2018. "New Perspectives on the Decline of US Manufacturing Employment," Journal of Economic Perspectives, American Economic Association, vol. 32(2), pages 47-72, Spring.
    5. Nicholas Bloom & Mark Schankerman & John Van Reenen, 2013. "Identifying Technology Spillovers and Product Market Rivalry," Econometrica, Econometric Society, vol. 81(4), pages 1347-1393, July.
    6. Bernard, Andrew B. & Jensen, J. Bradford & Schott, Peter K., 2006. "Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of U.S. manufacturing plants," Journal of International Economics, Elsevier, vol. 68(1), pages 219-237, January.
    7. Kyle Handley & Nuno Limão, 2017. "Policy Uncertainty, Trade, and Welfare: Theory and Evidence for China and the United States," American Economic Review, American Economic Association, vol. 107(9), pages 2731-2783, September.
    8. Andrew B. Bernard & Valerie Smeets & Frederic Warzynski, 2017. "Rethinking deindustrialization," Economic Policy, CEPR;CES;MSH, vol. 32(89), pages 5-38.
    9. Robert C. Feenstra & Akira Sasahara, 2018. "The ‘China shock,’ exports and U.S. employment: A global input–output analysis," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 1053-1083, November.
    10. David Hummels & Rasmus J?rgensen & Jakob Munch & Chong Xiang, 2014. "The Wage Effects of Offshoring: Evidence from Danish Matched Worker-Firm Data," American Economic Review, American Economic Association, vol. 104(6), pages 1597-1629, June.
    11. 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.
    12. Daron Acemoglu & David Autor & David Dorn & Gordon H. Hanson & Brendan Price, 2016. "Import Competition and the Great US Employment Sag of the 2000s," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 141-198.
    13. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    14. Teresa C. Fort & Shawn D. Klimek, 2018. "The Effects of Industry Classification Changes on US Employment Composition," Working Papers 18-28, Center for Economic Studies, U.S. Census Bureau.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Barth, Erling & Finseraas, Henning & Kjelsrud, Anders & Moene, Karl Ove, 2020. "Hit by the Silk Road: How Wage Coordination in Europe Mitigates the China Shock," IZA Discussion Papers 13259, Institute of Labor Economics (IZA).
    2. Stefano Federico & Fadi Hassan & Veronica Rappoport, 2020. "Trade shocks and credit reallocation," Temi di discussione (Economic working papers) 1289, Bank of Italy, Economic Research and International Relations Area.
    3. Andrew B. Bernard & Teresa C. Fort & Valerie Smeets & Frederic Warzynski, 2020. "Heterogeneous Globalization: Offshoring and Reorganization," NBER Working Papers 26854, National Bureau of Economic Research, Inc.
    4. Mansour, Hani & Medina, Pamela & Velasquez, Andrea, 2020. "Import Competition and Gender Differences in Labor Reallocation," IZA Discussion Papers 13608, Institute of Labor Economics (IZA).
    5. Daniel R. Ringo, 2020. ""Revitalize or Stabilize": Does Community Development Financing Work?," Finance and Economics Discussion Series 2020-029, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    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:red:sed019:1433. 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: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.