The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France

52 Pages Posted: 20 Sep 2016

See all articles by Clément Malgouyres

Clément Malgouyres

Paris School of Economics (PSE); Institut des politiques publiques (PSE)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2016

Abstract

The rapid rise of Chinese exports over the past two decades has raised concerns about manufacturing jobs and wage inequality in high-income countries. Spill-overs beyond the manufacturing sector are an important issue given the large size of the non-traded sector in modern economies as well as the imperfect spatial mobility of households. In this paper, I estimate the impact of Chinese import competition onto the structure of employment and wages of local labor markets in France, with an emphasis on spill-overs effects beyond manufacturing and the degree of local wage inequality. Local employment and total labor income in both manufacturing and non-manufacturing are negatively affected by rising exposure to imports. The estimates imply that each local manufacturing job destroyed by Chinese import competition results in the loss of about 1.5 local job outside of manufacturing. These substantial “local multiplier effects” are however much lower when expressed in terms of hours worked or earnings rather than job count. Import competition from China polarized the local structure of employment in the manufacturing sector. The wage distribution is uniformly negatively affected in manufacturing while the non-traded sector experiences wage polarization, i.e. a rise in upper-tail inequality and a decline in bottom-tail inequality. While overall wage inequality is on average not affected, I show that it increased in response to trade shocks in areas where the minimum wage is only weakly binding.

Keywords: wage distribution, international trade, import competition, local labor markets.

JEL Classification: F16, J23, J31, R11, R23

Suggested Citation

Malgouyres, Clément, The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France (September 2016). Banque de France Working Paper No. 603. Available at SSRN: https://ssrn.com/abstract=2840714 or http://dx.doi.org/10.2139/ssrn.2840714

Clément Malgouyres (Contact Author)

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Institut des politiques publiques (PSE) ( email )

48 boulevard Jourdan
Paris, 75014
France

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