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  3. American Economic Review
  4. October 2013
  5. The China Syndrome: Local Labor Market Effects of Import Competition in the United States

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

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Abstract

We analyze the effect of rising Chinese import competition between 1990 and 2007 on US local labor markets, exploiting cross- market variation in import exposure stemming from initial differences in industry specialization and instrumenting for US 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 US manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in more trade-exposed labor markets.

Citation

Autor, David H., David Dorn, and Gordon H. Hanson. 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States." American Economic Review, 103 (6): 2121-68. DOI: 10.1257/aer.103.6.2121

Additional Materials

JEL Classification

  • E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital
  • F14 Empirical Studies of Trade
  • F16 Trade and Labor Market Interactions
  • L60 Industry Studies: Manufacturing: General
  • O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
  • R12 Size and Spatial Distributions of Regional Economic Activity
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics