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U.S. job flows and the China shock

Author

Listed:
  • Asquith, Brian
  • Goswami, Sanjana
  • Neumark, David
  • Rodriguez-Lopez, Antonio
Abstract
International trade exposure affects job flows along the intensive margin (from expansions and contractions of firms' employment) as well as along the extensive margin (from births and deaths of firms). This paper uses 1992–2011 employment data from U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the ‘China shock’ on each job-flow type. Using the two most influential measures of Chinese exposure, we find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the nonexposed sector. Moreover, we demonstrate that the job-flow effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:inecon:v:118:y:2019:i:c:p:123-137
    DOI: 10.1016/j.jinteco.2019.02.002
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    3. Erling Barth & Henning Finseraas & Anders Kjelsrud & Kalle Moene, 2023. "Hit by the Silk Road: how wage coordination in Europe mitigates the China shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 32-72, January.
    4. Kazunobu Hayakawa & Tadashi Ito & Shujiro Urata, 2021. "Labor Market Impacts of Import Penetration from China and Regional Trade Agreement Partners: The Case of Japan," The Developing Economies, Institute of Developing Economies, vol. 59(3), pages 306-323, September.
    5. Lastauskas, Povilas & Proškutė, Aurelija & Žaldokas, Alminas, 2023. "How do firms adjust when trade stops?," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 287-307.
    6. Ying Ying Ida Xiao, 2024. "Labour market outcomes of the China shock in Australia," Australian Economic Papers, Wiley Blackwell, vol. 63(S1), pages 135-144, May.
    7. Aaron Blanco & Jeff Borland & Michael Coelli & James Maccarrone, 2021. "The Impact of Growth in Manufactured Imports from China on Employment in Australia," The Economic Record, The Economic Society of Australia, vol. 97(317), pages 243-266, June.
    8. Hayakawa, Kazunobu, 2022. "Assessing the impact of China shocks on intra-ASEAN trade," Journal of the Japanese and International Economies, Elsevier, vol. 65(C).
    9. Gueyon Kim, 2022. "Trade-Induced Adoption of New Work," Working Papers 2022-007, Human Capital and Economic Opportunity Working Group.
    10. Jay Hyun & Ziho Park & Vladimir Smirnyagin, 2021. "Import Competition and Firms� Internal Networks," Working Papers 21-28, Center for Economic Studies, U.S. Census Bureau.
    11. Pierce, Justin R. & Schott, Peter K., 2018. "Investment responses to trade liberalization: Evidence from U.S. industries and establishments," Journal of International Economics, Elsevier, vol. 115(C), pages 203-222.
    12. Ana Margarida Fernandes & Joana Silva, 2023. "Adjusting to Transitory Shocks: Worker Impact, Firm Channels, and (Lack of) Income Support," CESifo Working Paper Series 10479, CESifo.
    13. Endoh, Masahiro, 2022. "The impact of firms’ international trade on domestic suppliers: The case of Japan," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    14. 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.
    15. Endoh, Masahiro, 2023. "The China shock and job reallocation in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 68(C).
    16. Olabisi Michael, 2020. "Trade shocks and youth jobs," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 10(1), pages 1-12, March.
    17. Walls, Margaret A. & Wibbenmeyer, Matthew, 2023. "How Local are the Local Economic Impacts of Wildfires?," RFF Working Paper Series 23-03, Resources for the Future.
    18. Goya, Daniel, 2021. "The network effect of Chinese competition on what domestic suppliers produce," Economic Modelling, Elsevier, vol. 102(C).
    19. Choi, Jaerim & Hyun, Jay & Kim, Gueyon & Park, Ziho, 2023. "Trade Policy Uncertainty, Offshoring, and the Environment: Evidence from US Manufacturing Establishments," IZA Discussion Papers 15919, Institute of Labor Economics (IZA).
    20. Jiang, Zhe (Jasmine), 2023. "‘Multinational Firms’ Sourcing Decisions and Wage Inequality: A Dynamic Analysis," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    21. HAYAKAWA Kazunobu & ITO Tadashi & URATA Shujiro, 2022. "Impacts of Increased Chinese Imports on Japan’s Labor Market: Firm and Regional Aspects," Discussion papers 22037, Research Institute of Economy, Trade and Industry (RIETI).
    22. 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.
    23. Hayakawa, Kazunobu, 2023. "Japan's Dependence on China in Supply Chains: Diversion of Imports from China to ASEAN Countries," IDE Discussion Papers 897, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    24. Pham, Hoang, 2023. "Trade reform, oligopsony, and labor market distortion: Theory and evidence," Journal of International Economics, Elsevier, vol. 144(C).
    25. Ding, Xiaoli & Cheng, Sang & Qin, Wenjing & Gu, Xin, 2023. "Does uncertainty affect graduates’ decision to relocate for work? Evidence at China’s city level," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 10-19.

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    More about this item

    Keywords

    China shock; Import penetration; PNTR status; Job flows; Local labor markets;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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