The China Syndrome: Local Labor Market Effects of Import Competition in the United StatesArticle Citation

Autor, David H., David Dorn, and Gordon H. Hanson. 2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States." American Economic Review,103(6): 2121-68.

DOI: 10.1257/aer.103.6.2121


Abstract

We analyze the effect of rising Chinese import competition between1990 and 2007 on US local labor markets, exploiting cross-marketvariation in import exposure stemming from initial differences inindustry specialization and instrumenting for US imports usingchanges in Chinese imports by other high-income countries. Risingimports cause higher unemployment, lower labor force participation,and reduced wages in local labor markets that house import-competingmanufacturing industries. In our main specification,import competition explains one-quarter of the contemporaneousaggregate decline in US manufacturing employment. Transferbenefits payments for unemployment, disability, retirement, andhealthcare also rise sharply in more trade-exposed labor markets.