All-Around Table Liberalization and Firm-Level Employment: Theory and Evidence from China
53 Pages Posted: 1 Dec 2017
Date Written: October 26, 2017
Chinese firms faced an all-around trade liberalization process during the early 2000s: lower barriers from other countries on Chinese goods, and lower Chinese barriers on other countries’ goods and inputs. Using novel firm-level tariff data for trading Chinese manufacturing firms, this paper disentangles the effects of each type of trade liberalization on Chinese firm-level employment. For each firm type, reductions in Chinese and foreign final-good tariffs are associated with job destruction in low-productivity firms and job creation in high-productivity firms. In contrast, the net effect of reductions in Chinese input tariffs is limited to job destruction in low-productivity ordinary exporters.
Keywords: firm-level employment, firm-level tariffs, heterogeneous firms
JEL Classification: F120, F140, F160
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