Trade with China and Skill Upgrading: Evidence from Belgian Firm Level Data

LICOS Discussion Paper No. 248/2009

22 Pages Posted: 25 Nov 2009

See all articles by Giordano Mion

Giordano Mion

University of Sussex - Department of Economics; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR

Linke Zhu

Catholic University of Leuven (KUL) - Faculty of Business and Economics, LICOS

Multiple version iconThere are 2 versions of this paper

Date Written: October 2009

Abstract

We use Belgian firm level data over the period 1996-2007 to analyze the impact of imports from China and other low wage countries on firm growth, exit, and skill upgrading. We distinguish the impact of imports into two different channels: industry-level import competition and firm-level outsourcing. We find that imports from China are much more important than imports from other low-wage countries. Industry-level import competition from China reduced firm employment and induced skill upgrading. Import competition from China alone can explain around 30 percent of the total skill upgrading in Belgian manufacturing during 1996-2007. Our IV results confirm the ambiguous role of outsourcing in firm employment growth, but we also find that outsourcing to China will increase the relative employment of non-production workers and is beneficial for firm survival.

Keywords: import competition; outsourcing; China; skill upgrading

JEL Classification: F11, F14, F16

Suggested Citation

Mion, Giordano and Vandenbussche, Hylke and Zhu, Linke, Trade with China and Skill Upgrading: Evidence from Belgian Firm Level Data (October 2009). LICOS Discussion Paper No. 248/2009, Available at SSRN: https://ssrn.com/abstract=1512444 or http://dx.doi.org/10.2139/ssrn.1512444

Giordano Mion (Contact Author)

University of Sussex - Department of Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

HOME PAGE: http://sites.google.com/site/giordanomionhp/

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Hylke Vandenbussche

Catholic University of Leuven (KUL), CEPR ( email )

Faculty of Economics
Naamsestraat 69
B-3000 Leuven, 3000
Belgium
+32 16 326 920 (Phone)
+32 16 326 732 (Fax)

HOME PAGE: https://www.sites.google.com/site/vandenbusschehylke/home-1

Linke Zhu

Catholic University of Leuven (KUL) - Faculty of Business and Economics, LICOS ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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