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

63 Pages Posted: 3 May 2012

See all articles by David H. Autor

David H. Autor

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

David Dorn

University of Zurich - Department of Economics; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Gordon H. Hanson

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS); National Bureau of Economic Research (NBER)

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Date Written: May 2, 2012

Abstract

We analyze the effect of rising Chinese import competition between 1990 and 2007 on local U.S. labor markets, exploiting cross-market variation in import exposure stemming from initial differences in industry specialization while instrumenting for imports using changes in Chinese imports by industry to other high-income countries. Rising exposure increases unemployment, lowers labor force participation, and reduces wages in local labor markets. Conservatively, it explains one-quarter of the contemporaneous aggregate decline in U.S. manufacturing employment. Transfer benefits payments for unemployment, disability, retirement, and healthcare also rise sharply in exposed labor markets.

Keywords: Trade Flows, Import Competition, Local Labor Markets, China

JEL Classification: F16, H53, J23, J31

Suggested Citation

Autor, David H. and Dorn, David and Hanson, Gordon H., The China Syndrome: Local Labor Market Effects of Import Competition in the United States (May 2, 2012). MIT Department of Economics Working Paper No. 12-12, Available at SSRN: https://ssrn.com/abstract=2050144 or http://dx.doi.org/10.2139/ssrn.2050144

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David Dorn

University of Zurich - Department of Economics ( email )

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IZA Institute of Labor Economics

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Germany

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Gordon H. Hanson

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