Local Shocks and Internal Migration: The Disparate Effects of Robots and Chinese Imports in the U.S.

100 Pages Posted: 13 Jan 2020 Last revised: 22 Jun 2022

See all articles by Marius Faber

Marius Faber

University of Basel

Andres Sarto

Princeton University

Marco Tabellini

Harvard Business School

Date Written: May 9, 2022

Abstract

Migration is a key mechanism through which local labor markets adjust to economic shocks. In this paper, we analyze the migration response of American workers to two of the most important shocks that hit US manufacturing since the 1990s: Chinese import competition and the introduction of industrial robots. Exploiting plausibly exogenous variation in exposure across US local labor markets over time, we establish a new fact. Even though both shocks drastically reduced employment in the manufacturing sector, only robots led to a sizable decline in population size. We provide evidence that negative employment spillovers outside manufacturing, caused by robots but not by Chinese imports, can explain the different migration responses. We interpret our findings through the lens of a model that highlights two mechanisms: the cost savings that each shock provides and the degree of complementarity between directly and indirectly exposed industries.

Keywords: migration, employment, technology, trade

JEL Classification: J21, J23, J61

Suggested Citation

Faber, Marius and Sarto, Andres and Tabellini, Marco, Local Shocks and Internal Migration: The Disparate Effects of Robots and Chinese Imports in the U.S. (May 9, 2022). Harvard Business School BGIE Unit Working Paper No. 20-071, Available at SSRN: https://ssrn.com/abstract=3517458 or http://dx.doi.org/10.2139/ssrn.3517458

Marius Faber

University of Basel ( email )

Petersplatz 1
Basel, CH-4003
Switzerland

Andres Sarto

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Marco Tabellini (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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