U.S. Job Flows and the China Shock

50 Pages Posted: 6 Dec 2017 Last revised: 18 Oct 2021

See all articles by Brian Asquith

Brian Asquith

Upjohn Institute

Sanjana Goswami

University of California, Irvine

David Neumark

University of California, Irvine - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Antonio Rodriguez-Lopez

University of California, Irvine

Date Written: November 2017

Abstract

International trade exposure affects job creation and destruction along the intensive margin (job flows due to expansions and contractions of firms' employment) as well as along the extensive margin (job flows due to births and deaths of firms). This paper uses 1992-2011 employment data from the {universe} of U.S. establishments to construct job flows at both the industry and commuting-zone levels, and then estimates the impact of the `China shock' on each job-flow type. The China shock is accounted for by either the increase in Chinese import penetration in the U.S., or by the U.S. policy change that granted Permanent Normal Trade Relations (PNTR) status to China. We find that the China shock affects U.S. employment mainly through deaths of establishments. At the commuting-zone level, we find evidence of large job reallocation from the Chinese-competition exposed sector to the nonexposed sector, and establish that the gross employment effects of the China shock are fundamentally different from those of a more general adverse shock affecting the U.S. demand for domestic labor.

Suggested Citation

Asquith, Brian and Goswami, Sanjana and Neumark, David and Rodriguez-Lopez, Antonio, U.S. Job Flows and the China Shock (November 2017). NBER Working Paper No. w24080, Available at SSRN: https://ssrn.com/abstract=3082263

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Sanjana Goswami

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David Neumark

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Antonio Rodriguez-Lopez

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