China Syndrome Redux: New Results on Global Job Reallocation
60 Pages Posted: 18 Nov 2019 Last revised: 23 Nov 2020
Date Written: November 11, 2019
Trade between the U.S. and China is widely thought to have contributed significantly to the decline in U.S. manufacturing employment --- sometimes called the China Syndrome. Flipping the point of view, we examine the impact on China of the trade growth between 2000 and 2007: We divide China into prefecture-level cities and construct measures of export exposure based on a city's initial industry specialization and instrument China's export surge using the reduction in trade policy uncertainty. Rising exports do not contribute to any growth of industrial wage or labor productivity on average, but instead channel agricultural, unemployed, and non-participating workers into the industrial labor market and cause rural-urban migration. In our main specification, the loss of one U.S. manufacturing job is associated with eight new Chinese manufacturing jobs through China - U.S. trade links.
Keywords: China Syndrome, Export Growth, Employment, Wage, Labor Productivity
JEL Classification: E24, F14, F16, J23, J31, L60, R12, R23
Suggested Citation: Suggested Citation