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The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade
Open accessAbstract
China's emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in the US industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, is a key item on the research agenda for trade and labor economists.
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“As documented by Autor, Dorn, and Hanson (2016), all eight comparison countries used for the instrumental variables analysis witnessed import growth from China in at least 343 of the 397 total set of four-digit SIC manufacturing industries.”
From Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure (2020) · cites this paper as Autor, Dorn, and Hanson (2016)
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Metadata
- Authors
- Autor, D. H., Dorn, D., & Hanson, G. H.
- Affiliations
- National Bureau of Economic Research (US)
- University of Zurich (CH)
- Venue
- Annual Review of Economics
- Publisher
- Annual Reviews
- Published
- 2016-10-31
- Volume
- 8
- Issue
- 1
- Pages
- 205-240
- ISSN
- 1941-1383 (ISSN-L)
- 1941-1391
- OpenAlex
- W1906461530
- Cited by
- 1,305
- References
- 129
- Citations by year
- 2026: 103 · 2025: 196 · 2024: 127 · 2023: 140 · 2022: 122 · 2021: 153 · 2020: 123 · 2019: 168 · 2018: 96 · 2017: 49 · 2016: 21
- FWCI
- 30.90
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- Annual Review of Economics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- DSpace@MIT (Massachusetts Institute of Technology) (submittedVersion, cc-by-nc-sa)
- Econstor (Econstor) (submittedVersion)
- Zurich Open Repository and Archive (University of Zurich) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Historical Economic and Social Studies
- Keywords
- labor market adjustment, import competition, trade shocks, local labor markets, unemployment, wages, labor force participation, lifetime income, distributional effects of trade, trade costs, US-China trade
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