The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade
David H. Autor, David Dorn, Gordon H. Hanson
Summary
The authors review the empirical literature on how U.S. local labor markets adjusted to the surge in import competition from China beginning around 1990. They synthesize evidence showing that the gains from trade coexisted with large, geographically concentrated adjustment costs. They conclude that markets adjusted far more slowly than standard trade models predicted.
Key findings
- Local labor markets most exposed to Chinese import competition saw persistently depressed wages and employment for at least a decade.
- Adjustment to the trade shock was much slower than conventional trade theory assumes, with limited worker reallocation across regions.
- Adverse effects on earnings and job stability were concentrated among initially low-wage and less-educated workers.
Subjects & keywords
Cite this paper
David H. Autor, David Dorn, & Gordon H. Hanson (2016). The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade. Annual Review of Economics. https://doi.org/10.1146/annurev-economics-080315-015041
@article{autor2016china,
author = {David H. Autor and David Dorn and Gordon H. Hanson},
title = {The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade},
journal = {Annual Review of Economics},
year = {2016},
doi = {10.1146/annurev-economics-080315-015041},
url = {https://doi.org/10.1146/annurev-economics-080315-015041}
}