Opposing Firm-Level Responses to the China Shock: Output Competition versus Input Supply
American Economic Journal: Economic Policy
vol. 16,
no. 2, May 2024
(pp. 249-69)
Abstract
We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: an output shock affecting firms selling goods that compete with similar imported Chinese goods, and an input supply shock affecting firms using inputs similar to the imported Chinese goods. Combining French accounting, customs, and patent information at the firm level, we show that the output shock is detrimental to firms' sales, employment, and innovation. Moreover, this negative impact is concentrated in low-productivity firms. On the other hand, the impact of the input supply shock is reversed.Citation
Aghion, Philippe, Antonin Bergeaud, Matthieu Lequien, Marc J. Melitz, and Thomas Zuber. 2024. "Opposing Firm-Level Responses to the China Shock: Output Competition versus Input Supply." American Economic Journal: Economic Policy, 16 (2): 249-69. DOI: 10.1257/pol.20210753Additional Materials
JEL Classification
- D22 Firm Behavior: Empirical Analysis
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- F14 Empirical Studies of Trade
- J23 Labor Demand
- L25 Firm Performance: Size, Diversification, and Scope
- O31 Innovation and Invention: Processes and Incentives
- O34 Intellectual Property and Intellectual Capital
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