When the Floodgates Open: "Northern" Firms' Response to Removal of Trade Quotas on Chinese Goods
American Economic Journal: Applied Economics
vol. 6,
no. 4, October 2014
(pp. 226-50)
Abstract
Using the dismantling of the Multi-fibre Arrangement quotas on Chinese textile products in conjunction with China's accession to the World Trade Organization (WTO), within firms adjustments to intensified low-wage competition is analyzed. Employing Danish employer-employee matched data covering from 1995 to 2007, the analysis shows a significant change in the workforce composition of firms in response to heightened competition. Competition is found to negatively affect employment, value-added, and intangible assets of the Danish firms, and firms refocus away from products, where China's competitive advantage becomes higher. The results show an important role of the distributional impact of low-wage competition within firms in restructuring the industry.Citation
Utar, Hale. 2014. "When the Floodgates Open: "Northern" Firms' Response to Removal of Trade Quotas on Chinese Goods." American Economic Journal: Applied Economics, 6 (4): 226-50. DOI: 10.1257/app.6.4.226Additional Materials
JEL Classification
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- F16 Trade and Labor Market Interactions
- L25 Firm Performance: Size, Diversification, and Scope
- L67 Other Consumer Nondurables
- P33 Socialist Institutions and Their Transitions: International Trade, Finance, Investment, Relations, and Aid
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